chapter 1 Flashcards
define needs
a good or a service essential for living
define wants
a good or a service which people would like to but which is not essential for living. People’s wants are unlimited
define the economic problem
there are unlimited wants but limited amount of resources to produce the goods or the services to satisfy those wants. This creates scarcity
define, factors of production
factors of production are those resources needed to produce goods or services. There are four factors of production and they are in limited supply
define scarcity
the lack of sufficient products to fulfil the total wants of the population
what are the factors of production
land, labour, capital, enterprise
define land
the term used to cover all of the natural resources provided by nature and includes fields and forest, oil, gas, metals
define labour
the number of people available to make products
define capital
this is a finance, machinery and equipment needed for the manufacture of goods
define enterprise
the risk taking skill ability of the person who brings the other resources or factors of production together to produce a good or service, for example, the owner of the business. There people are called entrepenuaers
define opportunity cost
the best alternative forgone when making an economic decision/ the next best alternative given up by choosing another item
define division of labour
when the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.
what are the advantages of division of labour
- workers are trained in one task and specialise in this, this increases efficiency and output
- less time is wasted moving from one workbench to another
- quicker and cheaper to train workers as fewer kills need to be taught
what are the disadvantages of division of labour
- workers can become bored doing just one job, efficiency might fall
- if one worker is absent and no one else can do the job, production might be stopped
what is a business
businesses combine factors of production to make products( goods and services) which satisfy people’s wants
define added value
the difference between the selling price of a product and the cost of bought-in materials and components
what is specialisation
specialisation occurs when people and businesses concentrate on what they are best at
