Economics Unit 1

What is an economy

An area in which people produce and consume goods and services. This can be of any size, with any number of people.

What are the main economic groups

-consumers

-producers

-government

consumers

buy goods or services for their own personal use

producers

supply goods and services demanded by consumers

government

a political authority that runs the country

interdependence

each economic group responds to the actions of another group

Factors of Production

resources in an economy that can be used to make goods and services

Capital

human-made aids to production

Enterprise

organisation of the other 3 factors to make goods and services

Land

all natural resources in an economy

Labour

human resources in an economy

need

something a consumer has to have to survive

want

something a consumer would like but is not essential for survival

Basic Economic Problem

how to best use scarce resources to satisfy the unlimited wants of people

• what should be produced

• how should it be produced

• whom should it be produced for

Opportunity Cost

the next best alternative given up when making a choice

Sustainability

costs and benefits of economic choices now and in the future

economic sustainability

the best use of resources in order to create responsible development or growth, now and into the future

social sustainability

impact of how growth or development affects quality of life

environmental sustainability

impact of how growth or development affects the environment, and ensuring the effect is small and manageable