Intro to econ

what are the main economic groups?

consumers, producers, government

explain the role of consumers

a consumer is a person or organisation that directly uses a good or service such as a person who pays a hairdresser for a haircut

How are consumers influenced?

They are influenced by how much benefit they will gain from a good. This enables consumers to put a price on how much they value it. To make sensible decisions on the value of a good, consumers need to have information about the goods available and the ability to understand this information.

explain the role of producers?

a producer is a person, company or country that makes, grows or supplies goods and/or services such as a farmer who produces crops to be taken to supermarkets

how are producers influenced?

They are influenced by how much benefit they receive from a good. One benefit is profit. In order to maximise profit, suppliers choose what and how they produce. This can affect the quantity, price or quality of the goods produced.

what is the definition of profit?

The amount of money a producer has left after all costs have been paid.

explain the role of the government

a government is a political authority that decides how a country is run and manages its operation.

how are governments influenced?

They are influenced by wanting the best for society. The government can impact the whole economy by its policies, e.g. changing the level of unemployment benefit. The government can impact markets for specific goods and services, e.g. by adding taxes. Governments spend money in an economy, e.g. providing services, such as healthcare, and transferring money directly to individuals, such as child benefit.

what is a good?

A tangible product, i.e. a product that can be seen or touched.

What is a service?

An intangible product, i.e. a product that cannot be seen or touched.

What is interdependence?

Interdependence is where one group responds to the actions of another group.

what is the interdependence between the main economic groups?

Consumers: buy from producers allowing producers to make profit.

consumers: pay taxes to government helping the government to provide services to help benefit the society.

producers: supply good and services to consumers, other producers and the government. They employ people and pay people to do jobs reducing unemployment benefits for government.

government: gives money to some producers to encourage them to produce at a lower price, they also set up rules with restrictions for the consumers.

what is the definition of a factor of production?

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

What are the factors of production?

Land, Labour, Capital and Enterprise

explain the factor land

Land is the natural resources available for production in an economy such as trees, oil, the sea

explain the factor labour

Labour is the workforce available for production in an economy such as factory workers. It is affected by the quantity and quality of people able to work. The quality of the workforce is particularly affected by education and health.

explain the factor capital

Capital is the man-made aids to production in an economy such as roads

explain the factor enterprise

Enterprise is the factor of production that involves taking a risk and organising the other three factors in production and is done by entrepreneurs

how are all the factors of production linked?

ENTERPRISE: An entrepreneur bears the risk and takes forward a business idea .LAND, LABOUR, CAPITAL: The entrepreneur decides on the quantities of the different factors of production to combine and organises them during production. Goods and services produced

explain the term scarce resources

when there is an insufficient amount of something to satisfy all wants.

explain the term unlimited wants

The infinite desire for something.

explain the economic problem

The economic problem is how to best use scarce resources to satisfy unlimited wants of people.

what are the main questions linked to the basic economic problem

How: should goods and services be produced? For example should producers use more technology to produce or have large scale production.

For whom: should the goods and services be produced? For example should consumers only have goods.

What: should be produced?

How does the UK approach the economic problem?

What: The government intervenes in some markets by providing a good or service, that are important for society, to consumers. Such as the NHS. The NHS gives free vaccinations, if a disease was spread then more people would be sick, less people will work, leading to fewer goods and services being produced.

How: Producers want to produce goods and services with the lowest cost in order to maximise profit. In the UK, sometimes the government intervenes with regulations on production such as health and safety regulations.

For whom: The goods and services are allocated to consumers who can afford to buy them however once again, the government may intervene if the service or good is deemed important to society, such as education is free and accessible to everyone under the age of 19.

explain opportunity cost

Opportunity cost is the next best alternative given up when making a choice. Opportunity cost is the term to describe what has been given up. It covers the missed benefits that the other options may have given to consumers. It can be used to compare what could have been gained from different uses of resources. It can help decide which goods and services should be produced

what is the definition of an economic choice?

An option for the use of selected scarce resources

what is the definition of economic sustainability?

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

what is the definition of environmental sustainability?

The impact of development or growth where the effect on the environment is small and possible to manage, now and into the future.

what is the definition of social sustainability?

The impact of development or growth that promotes an improvement in quality of life for all, now and into the future.

what are the benefits of economic choices?

Efficient Resource Allocation: Making informed economic choices ensures that resources are allocated efficiently, reducing wastage and maximizing output.

Poverty Reduction: By prioritizing equitable distribution of wealth and resources, economic choices can help reduce poverty and bridge socio-economic disparities.

Sustainable economic choices focus on minimizing the consumption of non-renewable resources and promoting responsible usage of renewable resources to preserve them for future generations.

what are the costs of economic choices?

Pursuing economic growth without considering social factors can result in reduced social services, lack of investment in education and healthcare, and a decline in the overall quality of life for vulnerable populations.

Unsustainable economic choices, such as excessive borrowing or public spending, can result in mounting debt and place a burden on future generations.

Pollution and Climate Change: Economic decisions that prioritize short-term gains over environmental concerns can result in increased pollution, deforestation, and greenhouse gas emissions, contributing to climate change and its adverse effects on ecosystems and human health.