Economic methodology and the economic problem Flashcards
AQA A level economics 7136 specification
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Economics as a social science
Economics studies human behaviour and decision-making in the context of scarce resources, using scientific methods to develop theories and models.
Economic methodology
The study of how economists approach and investigate economic issues, using models and theories to explain and predict behaviour.
Positive statement
A statement that can be tested and validated; it is objective and fact-based.
Normative statement
A statement based on value judgements and opinions; it cannot be tested or validated.
The basic economic problem
The issue of scarcity: unlimited wants but limited resources, requiring choices to be made about allocation.
Scarcity
The condition where resources are finite and insufficient to satisfy all human wants and needs.
Opportunity cost
The value of the next best alternative foregone when a choice is made.
Factors of production
The resources used to produce goods and services: land, labour, capital, and enterprise.
Ceteris paribus
A Latin phrase meaning 'all other things being equal,' used to isolate the effect of one variable in economic analysis.
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