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Question 1

What is production?

Answer 1

The conversion of inputs into outputs

Question 2

What is a capital good?

Answer 2

A good used toward the production of other services, for example: buildings, machinery, equipment etc.

Question 3

What is a consumer good?

Answer 3

A good which is consumed by individuals which satisfy and need or a want.

Question 4

Name the four factors of production

Answer 4

Capital, Land, Labour and Enterprise

Question 5

How is enterprise different from the other factors of production?

Answer 5

Issues are addressed by deciding what to produce, how to produce it and who it will be produced for.

Question 6

Is enterprise included in command economies?

Answer 6

No. In a command economy, the central state (government) decides what to produce, how to produce it and whom to produce it for.

Question 7

Why do entrepreneurs take risks in a free market economy?

Answer 7

In a free market economy, there is a price incentive to generate more money, this leads to risk taking on behalf of entrepreneurs to generate more income to increase the price incentive.

Question 8

Can finite resources be recycled?

Answer 8

In theory yes, however, it is not often economically viable to recycle more than a tiny fraction.