IB Economics HL 2023
Ceteris paribus - ANS-all other things are being held equal
positive economics - ANS-matters of economics that can be proven to be
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by looking at the facts
normative economics - ANS-matters of economics that are based upon opinion and so
are incapable of being proven to be right or wrong
scarcity - ANS-the limited availability of economic resources relative to societys
unlimited demand for goods and services
land - ANS-the physical factor of production. It consists of natural resources
labour - ANS-the human factor of production. It is the physical and mental contribution
of the existing work force to production
capital - ANS-the factor of production that is made by humans and is used to produce
goods and services. It occurs as a result of investment
entrepreneurship - ANS-the factor of production involving organizing and risk-taking
opportunity cost - ANS-is the next best alternative foregone when an economic decision
is made
free good - ANS-goods or services which are unlimited in supply and have no
opportunity cost. the have unlimited supply at market price zero
economic good - ANS-a good or services which is relatively scarce and so have a price.
An opportunity cost is involved if it is consumed.
utility - ANS-the satisfaction or pleasure that an individual derives from the consumption
of a good or service
production possibility curve - ANS-shows the maximum combination of outputs that can
be production by an economy in a given time period
actual output - ANS-the actual production of goods and services in an economy over a
given time period
actual growth - ANS-occurs when previously unemployed factors are put into
production. It is represented by an movement from a point within a PPC to a new point
nearer to the PPC
Potential output - ANS-the possible production that would be possible in an economy if
all available factors were being employed.
Potential growth - ANS-occurs when the quantity/quality of factors of production within
an economy is increased. It is presented with an outward shift of the PPC.
Economic growth - ANS-the growth of real output in an economy over time. Usually
measured in real GDP
economic development - ANS-a broad concept which involves improvement in standard
of living, reducing in poverty, improved health and education.
sustainable development - ANS-development that meets the needs of the present
without compromising the ability of future generations to meet their own needs
free market economy - ANS-an economy where the means of production are privetly
held by individuals and firms. Demand and supply determine how much to produce,
how/how many to produce, an for whom to produce.
planned economy - ANS-an economy where the means of production are owned by the
state. The state determines how much to produce how much to produce, how/how
many to produce, and for whom to produce.
Transition economy - ANS-an economy in the process of moving from a centrally
planned economic system towards a more market-oriented economic system.
demand - ANS-the willingness and ability to purchase a quantity of a good or service at
a certain price over a given time period
law of demand - ANS-as a price of a good falls, quantity demanded increases
velben goods - ANS-goods that are the exceptions to the law of demand, where at high
prices, as price increases, then so does the demand
giffen goods - ANS-goods that are exceptions to the law of demand where at very low
prices, with consumers on low incomes and dependent upon the good for survival, as
price rises, then so does demand
supply - ANS-the willigness and ability of a producer to produce a good or service at a
given price
law of supply - ANS-as the price of a good rises the quantity supplied rises
maximum price - ANS-a price imposed by the authority and set below the market price
minimum price - ANS-a price imposed by the authority and set above the market price
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