OCR A Level Economics Study Set with Questions and Answers

Normative statement an opinion that cannot be confirmed by referencing facts Positive statement a statement that can be proved by referencing facts Why are economic models used? theories cannot be tested in a controlled environment The basic economic problem scarcity - consumer wants are always greater than available resources Opportunity cost the next best alternative foregone Factors of production resources used by a firm in production List and define the factors of production labour - the human element, both mental and physical Capital - man made aids to production eg technology Land - any natural resource used in production Enterprise - combining above factors to make a profit, risk taking How can a ppc be used? shows the efficiency of a firm and its maximum potential efficiency Shows possible manufacturing combinations between two products and the opportunity cost of sacrificing each product Demand amount of a product demanded by consumers who are willing and able to buy it at a certain price over a certain period of time Define determinants of demand Give examples factors that determine the demand for a product. Consumer income, price of a substitute, quality, advertising, seasonal preference Complementary good a good commonly purchased alongside another good