A social science is a study of society and the way individuals interact within it.
Economics is a social science, and is the study of how society employs finite resources in order to satisfy infinite wants.
Microeconomics is the study of individual economic units such as households and firms.
Macroeconomics is the study of the economy as a whole.
Growth is an increase in real GDP.
GDP/National Income is the value of all final goods and services produced within an economy in a given time period.
Potential output is the highest possible level of output that can be sustained over the long term.
Development is an increase in the standards of living. It is a qualitative measure, taking into account factors like education and health.
Positive statements are based on facts or evidence so can be proven or disproved using a scientific approach.
Normative statements are opinion based and biased. They cannot be proven or disproved.
Sustainable development is development that meets the needs of today without compromising the needs of tomorrow.
Ceteris paribus is Latin for all other things being equal.
Scarcity is the result of no resources being infinite, whereas the want of them is.
Factors of production include land, labour, capital and enterprise. These are the resources necessary to create goods and services in an economy.
Land is the gift of nature, everything on, under, above or in the land/sea. It is in return for rent.
Labour is the human component of the production of a good. It is in return for wages.
Capital is any man made assistance to capital. It is in return for interest.
Enterprise takes the risk and combines the other factors of production. It is in return for profit.
Utility is the satisfaction gained from the consumption of a product.
Opportunity cost is the cost of the next best alternative forgone.
A free good is one which is not scarce, has no opportunity cost and therefore no price.
An economic good is one which is scarce and therefore has an opportunity cost and price.
A free market is one in which resource allocation is determined by market forces (demand and supply). Market forces decide the answers to the three economic questions, what, how and for whom to produce.
A centrally planned/command economy is one in which resource allocation is determined by a central authority/government agent. The authority decides the answers to the three economic questions.
A transitional economy is one in transition between a command and free market system.
Goods are tangible products and can be split into durable and non-durable goods. Durable goods are consumed over time.
Services are intangible products.
A market is somewhere where goods and services are bought and sold.
A Production Possibility Curve/Frontier (PPF/PPC) is used to show all the possible combinations of two goods/services that can be produced within an economy. The curve itself is the potential output while anything inside is attainable.