Q&A Flashcards
What does a supply curve show?
There is a positive relationship between quantity supplied and price.
A disadvantage of a market economy.
Not enough merit goods
The scarcer a resource or product..
the higher the price consumers will pay
Labour is often one of the most expensive costs of production.
How can they lower these costs?
If firms can substitute capital (machinery) for labour, productivity often increases & costs decrease.
Geographical immobility of labour
Occurs when workers find it difficult to move from one geographical area to another in order to secure employment
Occupational immobility of labour
Refers to the ability of a worker to change occupation.
If their skill base is transferable between different occupations, then their occupational mobility is high.
The quality of land depends upon…
…the soil type, fertility, weather etc.
The two types of mobility of land
Land is geographically immobile, but is occupationally mobile since it can be used for a variety of economic activities
The reward for labour
Wages (salaries)
The supply of labour depends on…
The number of workers available (which is in turn influenced by population size, schooling, etc.)
The quality of labour depends on…
…the skills, education and qualification of labour
Reward for capital
Interest
Reward for land
Rent
Reward for enterprise
Profit
Why are choices necessary?
Because resources are scares relative to human wants, and have alternative uses.
What dies ppc stand for
Production possibility curve
What dies PES stand for
Price elasticity of supply
Inputs
Resources to produce goods and services:
Natural materials, land, machinery, workers
Outputs
The products made from inputs (resources)
Not productive activities
Any activity that fails to satisfy a human need or want.
Examples for capital
Machinery, tools,screwdrivers, offices
What is the supply of labour determined/ affected by?
• number of workers available
affected by:
• retirement age
• school-leaving age
• length of working day
• holiday entitlements
Opportunity cost
The benefit forgone by giving up the next best alternative use of scarce resources
If the price of one substitute good increases….
then demand for the substitute is likely to rise
If the price of a complementary good goes up or down…
the demand for both will fall or increase
If the price of a complementary good goes up or down…
the demand for both will fall or increase
Examples of complementary goods
cars + petrol
phone + charger
an increase in demand
- means that consumers now demand more of a product at every price than they did before
- the market demand curve will shift out to the right
a fall in demand
- means that consumers now demand less of a product at every price than they did before
- the market demand curve moves tin towards the left
What does a POC of a firm show?
The maximum possible output combinations of two goods irrespective of services that it can produce within a given set of inputs consisting of natural resources and other factors of production.
