Unit 1 Flashcards
What is the Basic Economic Problem?
People have unlimited wants but there are limited resources due to scarcity. This leads to choices having to be made and an opportunity cost.
What are economic goods?
Goods that are scarce and a sacrifice has to be made for them.
What are free goods?
Goods that are available to all and no sacrifice has to be made for it.
What are capital goods?
Goods used as an input in the production of other goods rather than being bought by the consumers e.g. tractors, machines.
What are consumer goods?
Goods being bought and used by the consumers e.g. food, clothing.
What are factors of production?
The resources needed to produce goods and services.
What are the 4 factors of production? Give examples.
Land - all natural resources (coal, forests).
Labour - the work force, both mental and physical effort (teacher, builder).
Capital - man-made goods, machinery and equipment (hammers, tractors).
Enterprise - the person willing and able to take the risk of starting the business (founder, CEO, shop owner).
What is geographical mobility?
The ability of a F.O.P to move around geographically (from area to another) quite easily.
Which of the F.O.P are geographically mobile?
Land - the resources such as oil are, but the actual land such as the sea are not.
Labour - yes, migrating is very common.
Capital - small man-made resources can be easily transported, but large and heavy machinery can be very expensive. Buildings are not.
Enterprise - yes since they can do their job using technology.
What is occupational mobility?
The ability of a F.O.P to be used for other types of productive activities/tasks.
Which of the F.O.P are occupationally mobile?
Land - yes since different resources can be used for different goods (wood for fuel, construction material, making tools and weapons, furniture and paper)
Labour - for skilled jobs, degrees and other requirements are needed. But training can be given, however, individuals that are very specialised in a certain task are immobile.
Capital- certain inputs are such as a computer since it can be put to use in many different industries. Some units of capital are specialised to an industry such as a nuclear power station.
Enterprise - yes since the skill involved can be applied in every industry
How to increase the quantity of F.O.P?
Land - allow more space for the land/resources.
Labour - increase immigration.
Capital - invest in more and faster machinery/man-made goods.
Enterprise - encourage more people to set up their own businesses
How to increase the quality of F.O.P?
Land - use fertiliser to improve the conditions of natural resources. And afforestation.
Labour - introduce better education and training globally. Can also set certain requirements needed for job.
Capital - invest in newer and faster technology/machinery.
Enterprise - provide more education, training and experience.
What is opportunity cost?
The next best alternative forgone.
What is a PPC?
A production possibility curve shows the maximum combination of two types of products that can be produced with the given resources.
