Main economic groups and the factors of production

What are the three main economic groups?

Consumers, producers and the government

What can these groups be referred to as?

Economic agents through their interdependence

Definition of a good

A good is something tangible (something that can be seen and touched) e.g. mobile phones

Definition of a service

A product that is intangible (something that can’t be seen or touched) E.g. Financial advice

What is a consumer?

Someone buys goods and services (end user of a good)

What makes up the consumers motivation to buy a good service?

They weigh up the benefits and satisfactions against the price they would have to pay to obtain it

Purpose of the Producer

Supply goods and services and choose what and how they produce to maximise their profits (They choose the price and quantity of the goods they produce)

Purpose of the government

A group of people that have the power to run a country in order to maximise the welfare of the consumer e.g. age restrictions

interdependence Between the consumer to the government

Pay Taxes

Independence from the government to the consumer

They provide age restrictions and laws

Regulate supply to protect the consumer from the producer

Interdependence from the produce to the consumer

Sell goods to the consumer for profits

Independence from the consumer to the producer

Consumers buy from producers to maximise self satisfaction

Independence from the producer to the government

Provides employment benefiting the government

Making the country internationally competitive

Pay corporate tax for public services

Independence from the government to the producer

Give them Subsidies increasing supply decreasing prices, increasing total revenue

Definition of the factors of production

Factors of production Are the resources in an economy that can be used in the production process

What are the four factors of production?

C-Capital

E-Enterprise

L-Land

L-Labour

What is Land

Natural or raw materials used in the production process eg coal, oil and gas

What is labour?

Total human resources that are available To provide a certain task or job aiding the production process

What is capital?

artificial(human made) Resources That are used to produce more goods and services

Capital letters human made and supports and enables the operation of the production is called infrastructure e.g. Broadband, roads electricity network