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Economics Basics
Economics
Economics is the study of rationing systems and how scarce resources are allocated to fulfil the unlimited wants and needs of consumers.
Needs
The basic necessities that a person must have in order to survive
Wants
The desires that people have for goods and services that are not essential for survival but enhance quality of life.`
BEP
Scarcity - that society has limited resources to meet unlimited wants
4 questions of BEP
What to produce?
How to produce?
How much to produce?
Who to produce for?
Opportunity cost
The real cost of the next best alternative that is forgone when a choice is made.
Factors of Production
Land - the natural resources used in production
Labour - the human work force in production
Capital - The non-natural resources used in production
Enterprise - the management, organization and planning of the other 3 factors
Types of products
Consumer goods - products sold to general public
Capital/Producer goods - products purchased by other businesses to produce other goods and services
Services - intangible products provided by businesses
