Page 2 Flashcards
What increases the amount of inputs into producing products?
New materials increase the amount of inputs into producing products, increasing output.
What effect does unemployment have on the position on the PPF?
Unemployment leads to resources that are not fully employed, resulting in the position in relation to the curve moving inwards.
What does the concept of tradeoff between capital and consumer goods illustrate?
It illustrates the relationship where capital goods are used in the production of other goods, while consumer goods provide immediate satisfaction.
How do capital goods affect an economy’s future productive capacity?
Capital goods increase an economy’s future productive capacity but reduce the current standard of living.
What influences the choices an individual makes?
Underlying economic influences such as age, income, education, family, and culture.
What are the four factors of production?
- Land
- Labour
- Capital
- Enterprise / Entrepreneurship
What is the return associated with land as a factor of production?
Rent
What is the return associated with labour as a factor of production?
Wage, Salary, Commission
What is the return associated with capital as a factor of production?
Interest
What is the return associated with enterprise/entrepreneurship as a factor of production?
Profit
What is the definition of the production process?
The process of making a good or service, with outputs being a good (tangible objects) or a service (intangible acts).
Fill in the blank: The quantity and quality of a country’s resources affect the standard of living and _______.
economic growth
What limitations do factors of production have?
The amount of natural resources available for production, such as land, fossil fuels, clean air, and water.
