1B Flashcards
What is the definition of factors of production?
The broad categories under which the resources that go into creating goods and services to satisfy human wants and needs.
What are the 4 factors of production?
Capital, Enterprise, Land and Labour (CELL)
What is the factor of production - land (with 3 e.g.s)?
Land refers to naturally occurring resources which may be used in the production of goods and services.
E.g. Land, Fuel and Water
What is the factor of production - Captial (with 3 e.g.s)?
Capital refers to human-made resources used in the production of goods and services.
E.G. machinery, money and tools
What is the factor of production - enterprise (with 3 e.g.s)?
Enterprise refers to the ability of controlling and managing the other 3 factors of production to produce goods and services.
e.g. CEO, BUISNESS OWNERS AND ENTREPRENUERS (CLT AND BOARD AND ADMIN FOR TERRACE - MIGHT NEED TO KNOW -EXAM)
What is the economic problem?
wants are unlimited, but resources are limited, leading to scarcity. This forces societies to make choices, creating opportunity costs. As a result, economies must decide what to produce, how to produce, and for whom to produce, ensuring the best use of limited resources.
What are economic systems?
Economic systems are the structures used by nations to resolve the economic problem of relative scarcity by answering the three key questions:
● What to produce?
● How to produce?
● For whom to produce?
Different systems reflect varying levels of government intervention:
Capitalist economies rely on market forces (supply and demand).
Socialist economies focus on equality and planning.
Most modern nations, like Australia, operate as mixed economies, combining both.
What are subsistent economies?
People produce goods for personal use, not for trade. There is little market activity, and survival depends on self-sufficiency. Example: Small villages where families grow their own food.
What are capitalist market economies?
Individuals and businesses make economic decisions based on supply and demand, with minimal government control. Markets determine what is produced and sold. Example: The U.S. economy.
What are socialist market economies?
The government controls key industries, but private businesses exist. It’s a mix of market and state control. Example: China, where major industries are regulated, but private businesses operate.
What are socialist command economies?
The government controls all production and distribution. A central authority makes all economic decisions. Example: Former Soviet Union, where industries were state-managed.
