Economics CA1

Four factors of production

Land

Labour

Capital

Entrepreneurship

Land

Natural resources ( land , soil ,minerals )

Earn rent

Labour

Human goods that produce services ( skills, talent ,knowledge , personal assistants )

Earn wages

Capital

Man made resources used to produce other goods ( (factories, tools ,equipment ,buildings )

Increase of productivity and efficiency

An investment

Earn interest

Entrepreneurship

Decisions and risks when running a business

Earn profit

Consumer goods

Everything we buy

Capital goods

Man made resources ( capital bought by producers - investment)

Investment

Spending on capital goods

Scarcity

Resources are limited but wants are unlimited

Economics

Best to use scarce resources in order to make goods that satisfy as many goods as possible

Opportunity cost

The sacrifice of the next best alternative (eg want a computer or a tablet but only have money for one of them . If you choose to buy the tablet the opportunity cost is the computer .)

Economy

An area in which people make or produce goods and services

Production

Any activity produced to satisfy people’s wants

Consumption

Use of goods

Consumers

People who buy goods

Economic goods

Everything we pay for ( involves opportunity cost )

Free goods

Unlimited resources ( sun water )

Capital goods

Man made resources ( buildings, tools, machines)

Consumer goods

Items for immmediate use

PPF( production possibility frontier )

Maximum combination of two goods an economy can produce assuming that all available resources are fully and efficiently used

Points on the curve

Attainable

Maximum productive potential

Points within the curve

Attainable

No opportunity cost

Use resources fully in order to produce more goods

Points outside curve

Unattainable

Not enough resources and can only be achieved through long term economic growth

Positive growth

Investment in capital

Discovery of new natural resources

Research and development

Curve going upwards

Negative growth

Natural disasters

Less investment

Wars

Unemployment

Curve going downwards

question criteria

Knowledge ( definition )

Application (use data )

Analysis (resolution )