Economics EOY

consumer

a person or organisation that consumers/buys a good or service

producer

a person, company or country that makes, grows or supplies goods or services

government

a political authority that decides how a country is run, manages operations and allocates recourses

goods

tangible products

services

intangible product

production

the total output of goods and services produced by a firm in a given time period

factors of production

the resources in an economy that can be used to make goods or services: CELL

Capital

the fop that relates to all human and man made aid to production e.g. machines, tools

Enterprise

the fop that takes a risk in organising the three other fops e.g. a business tycoon

Land

refers to the use of natural resources in the production process (free gifts of nature)

can be above or below land and from the sea

Labour

refers any human effort or resources into the production process

can be physical or intellectual e.g. workers, engineers

what is the role of the government?

to set laws, tax and to spend money on infrastructure and in an economy

basic economic problem

how to best allocate scarce resources to satisfy unlimited wants

need

something you have to have to survive

needs are limited

e.g. water, food, shelter, air

want

something you would like to have but not needed to survive

scarce resources

an insufficient amount of a resource to satisfy all wants

opportunity cost

the next best alternative given up when making a choice

economic choice

an option for the use of selected scarce resources

economic sustainability

the best use of resources in order to create responsible growth and development, now and into the future

social sustainability

the impact of development or growth that promotes an improvement in the quality of life for all, now and into the future

environmental sustainability

the impact of development or growth where the effect on the environment is small and possible to manage, now and into the future

market

a way of bringing together buyers and sells to buy and sell goods or services

market economy

an economy in which scarce resources are allocated by the forces of supply and demand

product market

a market in which finished goods and services are offered to consumers, producers and the public sector

factor market

a market in which the factors of production are bought and sold

primary sector

the direct use of natural resources, such as the extraction of basic materials from the land and sea

secondary sector

all activities in an economy that are concerned in manufacturing, assembling and construction (other 3 fops added to land)

tertiary sector

all activities in an economy that involve the idea of a service

examples of primary sector

fishing, mining, agriculture, fracking, foresty

example of secondary sector

packaging, building a car, constructing a table

examples of tertiary sector

hairdressing, babysitting, taxi service, receptionist

specialisation

The process by which individuals, firms, regions and whole economies concentrate on producing those products that they are best at producing

benefits and costs of specialisation on producers

benefits: more efficient, larger output, higher productivity, bigger market, EoS

costs: movement of workers (they get bored), dependancy on all parts of production working, possible failure of exchange can slow down process

benefits and costs of specialisation on workers

benefits: increased skill leads to higher pay, can do what they are best at

Increased Job satisfaction, allowing workers to do what they are good at

motivation

increased standard of living

costs: may get bored, not able to easily change jobs

Deskilling workers

Unemployment

fall in demand for a particular product

benefits and costs of specialisation for regions

benefits: jobs for residents, use of local resources, infrastructure development

costs: resource exhaustion, risk of fall in demand could lead to the economy collapsing, loss of advantage (causes job loss)

benefits and costs of specialisation for countries

benefits: economies of scale, more jobs, more international trade, greater tax revenue

costs: over exploitation of resources, dependancy on a particular product, unemployment (industries failing fire people)

demand

the willingness and ability to buy goods or services at a given time at a given price

utility

the level of satisfaction we get from a good or service

law of demand

as price increases, quantity demanded decreases

(inverse relationship)

substitutes

goods and services that can be used in place of one another

e.g coke and pepsi

compliments

goods or services that are usually bought together

e.g. salt and pepper

expansion and contraction of demand

expansion

contraction

less demand

reasons for shifts in demand

Shift in demand (changes in)

Population

Related products

Income

Tastes and fashion

Economic expectations

PED

the responsiveness of the quantity demanded to a change in price

Elastic demand

when the percentage change of quantity demanded is greater than the percentage change in price

inelastic demand

when the percentage change in quantity demanded is less than the percentage change in price

examples of goods with elastic demand

takeaway pizza, chocolate bar, luxury items

examples of good with inelastic demand

cigarettes, petrol, gas, water

PED equation

% change in quantity demanded /

% change in price

What factors determine PED?

Significance / brand loyalty

Percentage of income

Luxury

Addictive or habit forming

Time taken to find an alternative

Substitutes

inelastic and elastic PED values

inelastic \= above

e.g.

0.5

elastic \= below

1

e.g

2.5

always negative and unitary is

1

importance of PED for producers

HAD

helps maximise revenue

allows them guess results after a change in price

decision impact about supply

importance of PED for consumers

allows them to make choices if substitutes are available

if the product is inelastic there may be high tax and price rises

consumers PED depends on factors like season/weather

Travelling at peak times

high fares

Certain foods in summer

ice cream