Chapter 1 Flashcards
What is the economic problem?
The economic problem is where there are unlimited ones and limited resources does there is not enough factors of production, to keep up with the increasing demand of goods
What are the factors of production?
Land, labor, capital enterprise
What is the formula for scarcity
Unlimited ones plus limited resources
What is opportunity cost?
Opportunity cost is the value of the next highest valued alternative use of that resource
What is specialization?
Specialization is when resources are used in an efficient manner where both workers and businesses focus on doing well in one area or one product
What is the division of labor?
The division of labor is a form of specialization where the production process is split up into different tasks between the employees.
What are the advantages and disadvantages of division of labor?
The advantages is that there’s more I will put an efficiency there’s less time wasted, and it is quicker and cheaper as fewer skills have to be taught which reduces business costs
The disadvantages is that the workers can get bored of doing the same task over and over again, and if one workers absent in the whole production process is impacted
What is the purpose of a business?
Two combined scars factors of production to produce a good or service that satisfies customer demand and to create employment
What is added value?
Added value is the profit that is being added onto a product so that other costs can be paid for
What are the ways to increase added value or profit?
To increase the selling price while maintaining the same cost price, or reducing the cost price and keeping the same selling price
