INTRODUCING ECONOMICS
• Social science : The study of societies & human behaviour using a variety of
methods, including scientific method
• The ceteris paribus rule : That all other things remain the same
• Resources : The inputs used in the production of goods and services
• Renewable resources : Resources replenished by nature (eg: water, trees, sh etc.)
• Non- renewable resources : Reserves are nite (eg: coal, oil)
• Sustainable development : Development which meets the needs of the present
without compromising the ability of future generations to meet their own needs
• Economic goods : Any good (service) produced from scarce resources is also
scarce & their use has an opportunity cost
• Free goods : Goods which are unlimited in supply & therefore has no opportunity
cost. eg: air/ sunlight
• Factors of production : Anything that is useful in the production of goods and
services
• Factor endowment : The amount of factors of production available to an economy
to produce goods and service
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, • Opportunity cost : The bene ts foregone of the next best alternative when making
a choice
• Entrepreneur : An individual who organises the other factors of production and
risks their own money in a business venture
• Short run : Time period in which at least one factor of production is xed. A rm
can only change some and not all factor inputs
• Long run : The long run is a situation where all main factors of production are
variable.
• Very long run : This is a situation where technology and factors (government
policy; social changes) beyond the control of a rm can change signi cantly
• Production possibility frontier (PPF) : A curve or a boundary which shows the
maximum combinations of two goods an economy can produce whilst using all of
the available factor resources ef ciently, with technology constant, within a
speci ed time period
• Economic growth : The expansion in the productive capacity of the economy
• Consumer goods : Goods & services that are used by people to satisfy their needs
& wants
• Capital goods : Goods that are used in the production of other goods such as
factories, roads, machines & equipment
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• Social science : The study of societies & human behaviour using a variety of
methods, including scientific method
• The ceteris paribus rule : That all other things remain the same
• Resources : The inputs used in the production of goods and services
• Renewable resources : Resources replenished by nature (eg: water, trees, sh etc.)
• Non- renewable resources : Reserves are nite (eg: coal, oil)
• Sustainable development : Development which meets the needs of the present
without compromising the ability of future generations to meet their own needs
• Economic goods : Any good (service) produced from scarce resources is also
scarce & their use has an opportunity cost
• Free goods : Goods which are unlimited in supply & therefore has no opportunity
cost. eg: air/ sunlight
• Factors of production : Anything that is useful in the production of goods and
services
• Factor endowment : The amount of factors of production available to an economy
to produce goods and service
fi fi
, • Opportunity cost : The bene ts foregone of the next best alternative when making
a choice
• Entrepreneur : An individual who organises the other factors of production and
risks their own money in a business venture
• Short run : Time period in which at least one factor of production is xed. A rm
can only change some and not all factor inputs
• Long run : The long run is a situation where all main factors of production are
variable.
• Very long run : This is a situation where technology and factors (government
policy; social changes) beyond the control of a rm can change signi cantly
• Production possibility frontier (PPF) : A curve or a boundary which shows the
maximum combinations of two goods an economy can produce whilst using all of
the available factor resources ef ciently, with technology constant, within a
speci ed time period
• Economic growth : The expansion in the productive capacity of the economy
• Consumer goods : Goods & services that are used by people to satisfy their needs
& wants
• Capital goods : Goods that are used in the production of other goods such as
factories, roads, machines & equipment
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