Economic and Free Goods(Chapter 3) Flashcards
Free goods
Free goods- without limit (Air, natural light, ect.)
Economic goods
Economic goods- limited in supply (Cars, computer, etc.)
Exchange
Some people can satisfy their own wants and needs by producing a number of goods and services, however very few people can make all the things they want. So, consumers take part in exchange with producers, we use money now
Consumer goods
Economic goods that satisfy an immediate consumers need or want(durable, nondurable, or services).
Capital goods
These are used to make consumer goods although they can be both(machinery, tools, equipment). Buying these tools are known as an investment.
Factor mobility
Factor mobility means the ease at which resources or FOP can be moved from one productive activity to another without a big loss
Occupational mobility
The ability to move FOP between different productive tasks(An accountant leaves this job and becomes a programmer)
Geographic mobility
The ability to move FOP to different locations(leaving a job in one city and going to another in another city, or starting a bakery in France then closing it in France due to scarcity of resources available and reopening the buisness in US)
Advantages of factor mobility
- Moving FOP to more productive areas will increase the total amount of goods and services
- Allows FOP to be used in the best possible way
- Improves firm’s goods and services quality and quantity
- Allows firms to move their resources to an area with a higher demand for it
Why are some factors more mobile than others
Labor
Occupational mobility
Mobile: Depends on skill level in the other occupations
Example
bank clerk joins as an accounts clerk in a company
Geographic mobility
Somewhat mobile: It depends on family connection, transport, language and transferable qualities
Example
A bank clerk moves from India to England
Land
Occupational mobility
Mobile: It can be used for multiple products
Example
Using an area of land originally used for farming to build a school
Geographic mobility
Almost Immobile: The land itself is immobile but some Factors of the land can be mobile(e.g. Transporting wood)
Example
Moving 20logs of wood to a wood workshop to build a chair
Capital
Occupational mobility
Immobile: Can’t have another purpose
Example
Using a mixer to build cakes in a bakery, then the demand for bread increases so now we uses for making bread
Geographic mobility
Mobile: As they can be transported and can be used for the same purpose anywhere
Example
Using a mixer to make bread then transporting to another country to make bread there.
Enterprise
Occupational mobility
Mobile: the resources and skills can be used in another industry
Example
A person selling bread can also make another
Geographic mobility
Mobile: If the business is successful in one place its most likely to be successful in another area.
Example
Changing the location of a brand due to family occasions
How the quantity and quality of a FOP can be increased
Labor
Quantity
- Increase wages
- Increase of working age population
- Healthcare improvement
Quality
- Training/education
Land
Quantity
- Increasing rent
- New discoveries
- New equipment
- More farming
- Recycling/reusing
- New technology
- Reclaiming land
Quality
- Fertilizers
- New tech
- Less chemicals
Capital
Quantity
- Increasing interest
- More workers
- More factory’s
Quality
- New tech
Enterprise
Quantity
- Increasing profit
- Increasing awerness
Quality
- Better education
