LS1 Economics, Economy, Goods, Services Flashcards
What is the economy?
An economy is all the goods and services produced in an area
What is the difference between a good and a service?
A good is tangible whereas a service is intangible
What are the factors of production?
Land, Capital, Labour, Enterprise
What is capital?
Capital are the things which are used to make goods and services (Ai, Robotic, Machinery)
What is enterprise?
Enterprise is the willingness of people in business to take risks to make a profit
What is land?
Land refers to the natural resources such as oil, forests, and land itself
What are the different types of land?
Land can come as two types. Renewable and Non-renewable. Renewable is a resource which is regenerated over time where as non-renewable is a finite resource: this makes it more expensive
What is labour?
What does increased labour do?
Labour is all of the work done by humans in production. Increased productivity increases trade and economic growth
What are the 3 questions to do with economic problems? What issue do they help solve?
Three key questions:
What to produce?
How to produce it?
Whom to produce it for?
We need to know how to use the available scarce resources to satisfy people’s infinite needs and wants as effectively as possible
What are economic agents?
Economic agents are groups that participate in the economy
What are the 3 economic agents?
Producers
Consumers
Government
What do producers do?
Producers create goods and services. In economics, another word for business is a firm. Producers aim to maximise profit and set prices to match the demand
What do consumers do?
Consumers buy goods and services made by firms. Firms and individuals can be consumers. Consumers effect what is produced by market research of their demands
What does the government do?
The government sets the rules that other economic agents must follow. They do this by using legislative restrictions. It also produces some goods and services like roads and healthcare as part of the public sector. These help to use scarce resources to satisfy consumers wants and needs
Why are the factors of production scarce?
Enterprise is scarce as owners do not want to take big risks with lots of their money
Land is scarce as most resources have been exploited and land industrialised
Labour is scarce as there are a limited number of skilled workers to be employed
Capital is scarce as there is a lack of skilled labour and money to buy capital
