Economic

• The Basic Economic problem: There are scare resources but humans have unlimited wants.
• needs: goods that are essential, necessary, limited
• wants: the basic desire for goods, luxury or leisure
• Scarcity: The lack of sufficient products to fulfill the total wants of the population.
• Free goods: items that we need and want but have no limit
• economic goods:item we need or want but are limited in supply
• consumer goods: an economic good that satisfies the needs or wants of an immediate consumer
• Durable goods: Products that are long lasting and will not quickly wear out
• Non-durable goods: Products that have a short shelf life, perishable
• Capital goods: An investment to human-made resources used in the production of other goods and service
• Consumer services: Firms to provide us with servies
• Consumers: People or organisation which buy economic goods and services to satisfy their wants
• Producers: The people or an organisation who produces the goods and services
• Consumption expenditure: The total amount spend each period on economic goods
• Four factors of production: Land,

  Labour, Capital, Enterprise
• Land: Any natural resources or raw materials around us that can be extracted from the Earth's surface.

  Reward: Rent
• Labour: Physical and mental human effort

  Reward: Wages
• Capital: Man-made goods that can be used in further production of products

  Reward: Interest
• Enterprise: Organising the factors of production and taking business risks

  Reward: Profit
• Firm: An organisation that employs resources to produce and supply goods and services.
• Factor mobility: The ease which the fops can be moved from one production activity to another without incurring severe costs or losses
• Factor mobility in important bc:

  • Changes the type of goods and services produced according to human's needs and wants
  • More output of goods and services
  • The fops are moved to the best possible uses
  • Better quantity and quality of the products
• Methods of factor production:

  • Between firms of the same industry
  • Within a firm
  • Between industries
  • Between coun tries
• Factor mobility has two types:

  • Occupationally: moving fop's to different tasks
  • Geographically: moving the fop's to different places
• Opposite of factor mobility?

  Factor immobility
• Quantity: The amount of a good
• Quality: The degree of which a good or services satisfies a specific set of requirement
• Increasing quality and quantity can:

  • Provide more goods and services
  • New products and new ways of producing them
• Opportunity cost: the benefit we could have forgone for the next best alternative
• Production possibility curve: Shows the combination of goods that can be produced in an economy at a particular time, utilising all costs
• Free market economy: where there is no government involvement and the private sector own most or all of the resources
• Planned economy: The government own all or most of the resources
• Mixed economy: half half of government and private sector
• Quantity demand: The amount of a good or service consumers are able and willing to buy
• Individual demand: The demand of one consumer
• Market demand: The total demand of a product from all its consumers willing and able to buy it
• Demand: The want/willingness of consumers to buy goods and services
• Factors affecting the demand curve:

  • Consumer income
  • Change in habit, taste and fashion
  • Change in taxes on income
  • The price and availability of other goods and services
• Inferior good: a good that when the income drops the demand rises
• Complementary goods: Goods and services that are used with another good or services

  Substitute good: A product which can replace the function of another product