Concept 1 : The Basic Economic Problem Flashcards
What is scarcity?
When there is not enough satisfy demand
What is an economic good?
A product that requires resources
What is a free good?
A product that requires no resources to make
What are the 4 main factors of production?
Land, Labour, Capital, Enterprise
How can land be ‘occupationally mobile’?
Can be used for different purposes
How can land be ‘geographically mobile’?
It can’t be geographically mobile
‘The ability to change where one works or in what occupation’. This describes what type of mobility?
Mobility of Labour
What are 2 types ways that limit the mobility of Labour
Family, Education, Access to resources and housing
What is Opportunity Cost?
The best next alternative
What are 2 opportunity costs considered by workers?
Salary, Promotion
What are 2 opportunity costs considered by producers
Demand, Cost, Profit
What is a Production Possibility Curve (PPC?)
- The maximum output of two types of products,
- Their combinations
- Which can be produced by existing tech
On a PPC, explain the following points on the curve
a. Above the curve
b. On the curve
c. Below the curve
a. An output that is not yet attainable
b. An output where resources are being used efficiently
c. An output where resources are being used inefficiently
What does a straight, rather than a curved line on a PPC show?
That the costs between changing between one good and another is constant
What are 3 factors that shift a PPC inwards?
Low productivity, An unexpected disaster, Loss of skilled labour
