economics

wants

desires for goods and services

resources

inputs used to produce goods and services

the basic economic problem

where unlimited wants are greater than finite resources

scarcity

a situation where there are not enough resources to satisfy everyones wants

what to produce, how to produce, who to produce for

fundamental economic question

economic good

a product which requires resources to produce it

free good

a product which does not require any resources to make it

factors of production

the economic resources of land, labour, capital, and enterprise

land

natural resources used in production

labour

human effort used in production

capital

artificial goods used in production

consumer good

goods and services purchased by households for their own satisfaction

enterprise

risk taking and key decision making in business 

entrepreneur

a person who takes risks and make the key decisions in a business

size of population, age structutre of the population, retirement age, school leaving age, attitude to woman in labour force

how is the quantity of labour determined

labour force

people in work and those actively seeking work

productivity

the output per factor of production in an hour

labour productivity

output per worker hour

output

goods and services produced by factors of production

investment

spending on capital goods

gross investment

total spending on capital goods

depriciation

the value of capital goods that have become worn out or obsolete

net investment

gross investment minus depreciation 

negative net investment

a reduction in the number of capital goods caused by some obsolete and worn out capital goods not being replaced

opportunity cost

the best alternative forgone

production possibility curve

what does ppc stand for?

production possibility curve (PPC)

a curve that shows the maximum output of two types of products and the combination of those products can be produced with existing resources and technology

it will shift to the if there is an increase in quantity or quality of resources

what does a shift to the right of the ppc mean

it will shift to the if there is a reduction in quantity or quality of resources 

what does a shift to the left of the ppc mean

market

an arrangement which brings buyers into contact with sellers and which includes all the buyers and sellers

consumers

people who buys goods and services for their own or their familys use

firm

a business organisation that produces goods and services

raw material

basic materials used to produce goods