Markets and Allocation of Resources Flashcards
What is the difference between a need and a Want?
Need is essential for survival, but a Want is not essential.
What is the basic economic problem?
People have an unlimited wants and needs but we have a limited
amount of resources.
What is an opportunity cost?
The benefit forgone of the next best alternative.
What are the 3 Economic groups?
Producers
Consumers
Government
What are the 4 Factors of Production?
Capital
Enterprise
Land
Labour
What are the rewards for the 4 Factors of Production?
Capital = Interest
Enterprise = Profit
Land = Rent
Labour = Wages
What is a Market?
A market is an opportunity for buyers and sellers to meet and determine the price of a good or service.
What is a Factor Market?
A market for factors of production (land, labour, capital and enterprise).
What is a Product Market?
A market concentrating on the sale of the final product or service.
What are the 3 Economic Sectors?
Primary
Secondary
Tertiary
What is Specialisation?
Specialisation is the concept of how an economy will start to concentrate on the production of goods or provide services at which it is the most efficient.
What are some gains from Specialisation?
Higher output
Variety
Lower prices
What is Division of Labour?
When a firm separates its workforce so that many separate tasks are undertaken by specific individuals.
What are some Advantages of Division of Labour?
Increased output
Increased productivity
Reduced cost of production for firm
What are some Disadvantages of Division of Labour?
Boredom/Low morale
High levels of staff turnover/ leaving
Lack of choice for consumers
