Year 10 Money and Markets Revision

Economics

A social science that studies the decisions made by individuals, businesses, governments and other groups about how scarce resources are allocated

Needs

Refers to an individuals basic requirement that must be fulfilled, in order to survive; and maintain a minimum standard of living

Wants

Described as the goods and services, which individuals like to have, which can improve an individuals quality of life

Goods

Are physical, tangible items that can be produced, owned, and traded that satisfy the needs and wants of individuals

Services

intangible actions performed for a person that satisfy the needs and wants of the individual

Relative scarcity (Economic problem)

Satisfying unlimited wants with only limited resources

Three economic questions

What and how much to produce? How to produce? For whom to produce for?

Factors of production

Natural resources, capital resources, Labour resources, Entrepreneurial resources

Natural resources

Raw materials from nature used in production

Natural resources example

Forests, water, minerals

Capital resources

The machinery, plant, and equipment made by people to assist in the manufacture of goods

Capital resources example

Machinery, trucks, robotics

Labour resources

The mental and physical effort by humans in the production process

Labour resources examples

Workers such as teachers and engineers

Entrepreneurial resources

The skills of those individuals who combine the other factors of production to create an enterprise to produce goods and/or services

Entrepreneurial resources examples

Elon musk, Jeff Bezos

Production

The total value of all the goods and services that are produced in an economy over a period of time

Income

The total amount of income earned by those who have contributed to the production of the goods and services in the production process

Expenditure

The total value of the spending on all the goods and services produced

Economic activity

The real value of the production, employment, incomes and expenditure in an economy

Opportunity cost

The value of the next best alternative forgone when a choice is made

Three economic concepts (PPF)

Opportunity cost, productive capacity, Productive efficiency

Three economic assumptions (PPF)

Only two goods are being produced in the economy

All resources or factors of production can be used in production

All resources are being used efficiently based upon the existing level of technology