Resources and scarcity (Theme 1 only)

1.1.1, 1.2.3, 1.2.4, 1.3

the economic problem

arises from the gap between limited resources and unlimited wants, leading to choices about resource allocation.

the four factors of production

are land, labour, capital (fixed is machinery and tech, financial is money), and entrepreneurship, which are essential in creating goods and services.

entrepreneur

an individual who seeks to supply products to a market for a rate of return (i.e. a profit)

specialisation

focus on a specific task or product, increasing efficiency and expertise. it risk, as demand could change due to resources being exhausted. countries become reliant on each other

division of labour for a business

greater productivity - workers become skilled, less training, lower labour unit cost

but long run decrease as workers become demotivated. fewer transferable skills leading to unemployment

demand

the quantity of a good that customers are willing to buy at a given price.
but notes that consumer’s intensions can change, data becomes out of date and businesses can only plot a couple of points