The Function Of An Economy

Question 0

Define division of labour

Answer 0

Specialisation by workers

Question 1

Define capital productivity

Answer 1

Output per unit of capital employed

Question 2

Define factors of production

Answer 2

The inputs to the production process: LAND (all natural resources), LABOUR (the workforce), CAPITAL (the stock of manufactured resources used in the production of goods and services), ENTREPRENEURS (individuals who seek out profitable opportunities for production and take risks in attempting to exploit these)

Question 3

Define fixed capital

Answer 3

Economic resources such as factories and hospitals which are used to transform working capital into goods and services

Question 4

Define human capital

Answer 4

The value of the productive potential of an individual or group of workers. It’s made up of the skills, talents, education and training of an individual or group and represents the value of future earnings and production

Question 5

Define labour productivity

Answer 5

Output per worker

Question 6

Define market

Answer 6

Any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services

Question 7

Define non-renewable resources

Answer 7

Resources which once exploited cannot be replaced e.g. coal and oil

Question 8

Define non-sustainable resource

Answer 8

Resource which is being economically exploited in such a way that it is being reduced over time

Question 9

Define primary sector

Answer 9

Extractive and agricultural industries

Question 10

Define productivity

Answer 10

Output per unit of input employed

Question 11

Define profits

Answer 11

The reward to the owners of a business. It’s the difference between a firm’s revenues and its costs

Question 12

Define renewable resources

Answer 12

Resources such as fish stocks or forests which can be exploited over and over again because they have the potential to renew themselves

Question 13

Define secondary factor

Answer 13

Production of goods, mainly manufactured

Question 14

Define specialisation

Answer 14

The production of a limited range of goods by an individual, firm or country in cooperation with others so that together a complete range of goods is produced

Question 15

Define stakeholders

Answer 15

Groups of people which have an interest in a firm, such as shareholders, customers, suppliers, workers, the local community in which it operates and government

Question 16

Define sustainable resource

Answer 16

Renewable resource which is being economically exploited in such a way that it will not diminish or run out

Question 17

Define tertiary sector

Answer 17

Production of services

Question 18

Define utility

Answer 18

The satisfaction derived from consuming a good

Question 19

Define welfare

Answer 19

The well being of an economic agent or group of economic agents

Question 20

Define working or circulating capital

Answer 20

Resources which are in the production system waiting to be transformed into goods or other materials before finally being sold to the consumer