Chap 1 Unit 1 Flashcards
What is opportunity cost?
Sacrificing something to gain something else
What are the four factors of production and explain them
Land - all natural and raw materials, both renewable and non- renewable ( fossil of soil and the resources of the sea)
Labour - people that are part of production of goods and services. Human effort both mental and physical
Capital - man made aid to production
Entrepreneur - takes risk of being involved in production and puts all factors of production together to produce goods and services
Production possibility frontier???
What is it’s relation?
Illustrates maximum that economy can produce if all resources are fully employed and used efficiently.
Has a negative relation
What is the economic problem of scarcity?
Scarcity exists because resources are finite (limited supply of it) and wants are infinite
What causes a outward shift of PPF?
- advanced technology
- discovering new resources
- improvements in education and learning
- emigration and retirement which leads to increase of workforce
- new methods made to increase production
What causes a inward shift of PPF?
- natural disasters
- recession, results to loss of productive capacity, factories close down permanently
- emigration can decrease workforce
Division of Labour?
Tasks are split into parts and workers are responsible for a small part of making product/ service
What are the advantages of DOL?
- things are done quicker as they don’t have to move around
- person is responsible for the part they are best at
- only have to be trained for specific part
- efficiency increased
Why are the Disadvantages of DOL?
- person gets bored of doing same thing, increase of staff turnover
- absence of one worker destroys production
- limit of skills
- no uniqueness as product is identical
