Unit 1 Flashcards
what is resources
the inputs required for the production of goods and services
what is the fundamental economic problem
there is finite resources and unlimited wants
what are economic goods
those which are scarce in supply and can only be produced with an economic cost
what are free goods
those which are abundant in supply such as air or light
what are the factors of production
land
labour
capital
enterprise
what is land
all natural resources
reward for land is rent
geographically immobile but occupationally mobile
what is labour
all the human resources available in an economy
reward is wage, salaries
depends on skills, education and qualification and can be occupational and geographical mobility
what is capital
all the man made resources available in an economy
reward is interest recieved
what is enterprise
the ability to take risks and run a firm and organizes all the other factor of productions and is usually highly mobile
what is opportunity cost
the next best alternative that is sacrificed in order to satisfy the other
what is a production possibility curve
shows the maximum combination of two goods that can be produced by an economy with all the available resources
what happens if the economy is producing inside the PPC
it is inefficient
what is required for an outward shift in the PPC to occur
discover or develop raw new materials
employ new technology and production methods
increase labour force by encouraging birth and immigration
what happens when the PPC shifts outwards
more production possibilities are created for economic growth
what is required for an inward shift in the PPC to occur
natural disasters
very low investment in new technologies will cause productivity to fall
running out of resources
