Social Science - A science which studies the institutions, functions, relationships and organisaion of human society. The scientific methodology consists of collecting and compiling data, focusing on emerging patters, formulating a hypothesis and finally testing the hypothesis against another set of data in order to formulate a theory.
Economics- The study of society's optimal use of scant resources ( Land, Labour, Capital, Entrepreneurship). Economics is a social science focused primarily on the analysis of the societal systems of production, distribution, and consumption of goods and services.
Micro Economics- The field of economics preoccupied with the inter-relationships between individual components in the economy; firms, industries and consumers. This interplay is the basis for individual markets.
Macro Economics- The sun total of all micro partsm the aggregate if individuals' firms' behaviour. The four main areas of study are:
- Growth (Increase in total output)
- Price Level (Inflation)
- Labour Markets (Unemployment)
- The Balance in the Foreign Sector (Exports (X)/Imports (M), Exchange Rates).
Growth (Economic Growth)- Growth is the increase in national output within an economy (country or region) during a time period- usually 1 year. This is put in percentage terms to show the annual percentage increase in output. It is masured in money terms and usually adjusted for inflation to show real growth (show what has actually been produced).
Development- The concept of development is a qualitative variable and thus far broader than any of the variables aimed at describing it. Development is therefore often put in terms of goals such as access to basic necessities such as food, water and shelter; availability of employment, education and culture; and having social choices and basic freedom (e.g. Freedom of speech).
Positive Statement- Based on facts or evidence, free from judgement and subjective standpoints. Can be proved or disproved using a scientfic approach.
Normative Statement- Based on norms, and so they are subjective and biased- can't be proved or disproved.
Factors of Production- There are 4 factors of production. These are the resources necessary to create goods and services in an economy.
- Land
- Labour
- Capital
- Entrepreneurship
Scarcity- The excess of wants resulting from having limited resources ( Land, Labour, Capital and Entrepreneurship) in satisfying the endless wants people have. Scarcity is a universal problem for societies (not limited to 'poor' countries).
Utility- The benefit/satisfaction one gets from the consumption of a good.
Marginal Utility- The addition to total utility resulting from the consumption of the extra good. (e.g. the beer after a rugby game.)
Opportunity Cost- The option foregone in making the choice to purchase product A over product B.(Basically put) When purchasing Product A instead of Product B, Product B would be the oppotunity cost.
Free Goods- Does not incur any Opportunity Cost in its production. (resources involved have no possible alternative use).
Economic Goods- A good which uses scarce resources in being provided and thus there is an opportunity cost og the alternative goods foregone.
Production Possibility Curve (PPC)- A diagram which illustrates total attainable output based on the limits of available resources. The curve (line) shows the limits of possible output and also the possible combinations of two groups in terms of total output. (e.g. Cars and weapons)
Diminishing Returns- When inreasing the use of resourves will yield more output but at a diminishing rate. ( each additional use of input (e.g. worker) will create less of an addition to output than previous units of input.
Centrally Planned Economy- An economic system relying on centralised government ownership/planning and control tto solve the basic economic problem of 'what, how, for whom'.
Mixed Economy- An economic system where the fundamental economic qustion of 'who, what , for whom' os solved by a mixture of government ownership/intervention/planning and the dynamics of (free) market forces.
Free Market- An economy where both consumers can purchase whatever they like and producers can produce what they like, with no government intervention.
Production Possibility Curve (PPC)- A diagram which illustrates total attainable output based on the limits of available resources. The curve (line) shows the limits of possible output and also the possible combinations of two groups in terms of total output. (e.g. Cars and weapons)
Diminishing Returns- When inreasing the use of resourves will yield more output but at a diminishing rate. ( each additional use of input (e.g. worker) will create less of an addition to output than previous units of input.
Centrally Planned Economy- An economic system relying on centralised government ownership/planning and control tto solve the basic economic problem of 'what, how, for whom'.
Mixed Economy- An economic system where the fundamental economic qustion of 'who, what , for whom' os solved by a mixture of government ownership/intervention/planning and the dynamics of (free) market forces.
Free Market- An economy where both consumers can purchase whatever they like and producers can produce what they like, with no government intervention.
