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Factors of production
Resources used to produce goods and services.
Land
Natural resources above and below the earth.
Labour
Physical and mental work performed by people.
Capital
Man-made goods for producing more goods.
Entrepreneurship
Skill to organize production and create businesses.
Scarcity
Limited resources against infinite wants.
Opportunity cost
Value of the next best alternative forgone.
Choice
Decision-making due to resource scarcity.
Efficiency
Optimal use of resources for maximum output.
Equity
Fair distribution of opportunities and resources.
Economic well-being
Quality of life and financial security.
Sustainability
Meeting present needs without compromising future generations.
Economic Goods
Scarce resources with opportunity cost and price.
Free Goods
Unlimited resources with no opportunity cost or price.
Centrally Planned Economic System
Government controls all economic decisions and resources.
Free Market
Consumers and producers make economic decisions freely.
Capital Goods
Man-made outputs aiding production processes.
Consumer Goods
Goods/services consumed by individuals in an economy.
PPC model assumptions
Quality, quantity, and technology of resources are constant.
Households
Source of labour and land in the economy.
Firms
Producers of goods using factors of production.
Leakage
Money exiting the circular flow of income.
Injection
Money entering the circular flow of income.
Circular flow model assumptions
Households own production factors; firms produce goods.
