Production Flashcards
What is the definition of production in economics?
Production refers to the process of combining resources (inputs) to create goods and services (outputs) to satisfy human wants.
What are the four factors of production?
The four factors of production are land, labor, capital, and entrepreneurship.
What is meant by the term “opportunity cost” in the context of production?
Opportunity cost is the value of the next best alternative foregone when a choice is made in the production process.
What is the difference between short-run and long-run production?
In the short run, at least one factor of production is fixed, while in the long run, all factors of production are variable.
Define the tertiary sector.
the part of the economy that provides services instead of goods. Examples include shops, schools, hospitals, banks, and transport services. It focuses on helping people or businesses rather than making products.
explain the effects of sectoral change
Sectoral change occurs when an economy shifts focus from farming (primary), to industry (secondary), or services (tertiary). It leads to economic growth, new job opportunities, urbanization, improved technology, and lifestyle changes. However, it can cause unemployment, inequality, and environmental challenges if not managed well.
Define Primary sector
the part of the economy that involves extracting or harvesting natural resources directly from the Earth. This includes activities like farming, fishing, forestry, and mining. It focuses on using raw materials that are essential for further production in other sectors, such as manufacturing (secondary) or services (tertiary).
Define Secondary sector
the part of the economy that focuses on manufacturing and industrial production. It involves transforming raw materials from the primary sector into finished goods or intermediate products. Examples include factories that produce cars, clothing, construction materials, and processed foods. This sector plays a key role in adding value to raw materials and supports economic development through industrialization.
Define the quaternary sector
the part of the economy that focuses on knowledge-based activities and intellectual services. It includes areas such as research and development (R&D), information technology (IT), education, financial consulting, and scientific innovation. This sector deals with creating, analyzing, and sharing information to drive progress in other industries. It is often seen as an extension of the tertiary sector.
Define the term Added value
the value of the output is greater than the costs of production, thereby earning a profit for the business
