Economics 1 Flashcards
the economic problem
people have infinite wants whilst resources are scarce.
planned economy
state decides what, how to produce.
mixed economy
combination / balance of a government controlled economy and free economy.
free economy
market without government regulation.
planned economy eg?
north korea, china
mixed economy eg?
UK
free economy eg?
switzerland, ireland
scarcity means that people must
make a choice (rational decisions change depending on the individual).
need
a necessity and something that is someone must have to live.
want
not essential, something someone would like to have.
opportunity cost
next best alternative foregone
what are the factors of production?
CELL
c - consumers
e - enterprises
l - land
l - labour
primary sector with eg
extracting raw materials
eg. farming, mining, fishing
secondary sector with eg
processing or refining materials
eg.manufacturing
tertiary sector with eg
providing services to public or private sector
eg.education,health
why has primary jobs decreased?
because of the industrial revolution people moved to secondary jobs
why has secondary jobs decreased?
machines can now replace workers, this benefits the company as they wouldn’t have to pay wages to workers.
markets?
any situation when buyers and sellers exchange goods and services.
factor market
markets for factors of production (CELL).
product market
final goods or services themselves.
specialisation
when a group focuses on producing certain products.
advantages for individuals
- high productivity
- focus on one product
- getting more skilled at their own job
advantages for firms
- more quality products
- more efficient (cost per unit)
disadvantages for individuals
- limited to one set of skills
- boredom
