Microeconomics aqa 3.1.1

What’s the basic economic problem

The biggest problem is scarcity, resources are limited to what everyone wants

What are the main economic resources

Known as the factors of production, this includes Land, Labour, Capital and enterprise

What is land in factors of production?

Natural resources such as Water, Oil and farmland

What is labour in factors of production

Human effort

What is Capital in factors of production

Man made resources used in production such as machinery tools

What is enterprise in factors of production?

The skill of organising the other factors and also taking risk

Opportunity cost

The value of the net best alternative foregone

PPF (production possibility frontiers)

urge showing the maximum combinations of two goods and economy cna produce when all resources are fully efficiently employed

Specialisation

When individuals, firms or countries concentrate on producing what they are best at

Division of labour

Breaking down production into separate tasks, each performed by different workers

Free market economy

Resources allocated entirely by the price mechanism

Economic welfare

The economic well being of an individual, a group within society or and economy

Capital Good

A good which is used in the production of other goods and services

Finite resource

A resource such as oil, which is scarce and will run out as it is used

renewable resource

A resource that with careful management can be reused

scarcity

The fact that people have unlimited wants but the resources are limited