1.1.1 The economic problem

• how can brain drain cause decline?

  highly qualified labour/graduates move overseas so don't boost the country's economy.
• how can resource depletion cause decline?

  the opposite of new resources, huge impact if the country runs on natural resources
• how can weather patterns cause economic decline?

  drier weather can mean countries cant achieve their agriculture targets.
• what is trade-off?

  Giving up one thing for another
• what is kaizen?

  continuous improvement
• How do new resources cause economic growth?

  more (natural) resources such as coal and oil means more is produced.
• How does education and training cause economic growth?

  as the proportion of educated workers increases the country becomes more productive. vocational and academic education can be provided (in balance) so tasks are carried out efficiently.
• How does new technology cause economic growth?

  newer advanced technology such as robots and the internet increase productive potential, production is quicker and more reliable + higher productivity.
• How does improved efficiency/productivity cause economic growth?

  using less resources to make each good, newer production methods more of each type of good can be produced.
• How can economic decline be caused?

  When the quality and quantity of FOP decrease and the graph shifts inwards .Land could be destroyed. Labour is less productive, Capital is outdated/obselete.
• how does Ethiopia struggle with scarcity.

  shortages of fertile soil and water, reduced food production because only 4% of fertile land is irrigated. The country does not have the finance to invest and make use of their rivers such as the Blue Nile or Awash.
• developed countries lean towards which type of good? but what is the outlier?

  consumer goods (eg. the UAE) but china is reliant on capital goods as these are used to manufacture consumer goods.
• what is the definition of FOP ?

  The inputs required to produce goods and services.
• Why is For whom should g/s be produced part of the basic economic problem?

  In a market economy the forces of demand and supply will determine who producers will make products for and there will be a method of distribution, it can be unequal at times depending on the g/s
• Why is How should g/s be produced part of the basic economic problem?

  producers will combine the factors of production in order to produce products.
• Why is What g/s should be produced part of the basic economic problem?

  economic incentives such as higher prices can guide producers to what they should produce.
• what is productivity

  outpet per unit of input
• How can economic growth be caused? (4 ways)

  1) Improved efficiency/productivity 2) New Resources are found. 3) New technology4) Education and Training
• What are capital goods?

  machinery , plant (factories) or tools, man-made and used to make other g/s
• what are consumer goods ?

  They are items that make life easier eg. cars, sweets, clothes
• What is Land?

  Natural resources available for production
• What is Labour?

  The human input into the production process
• What is Enterprise?


  Entrepreneurs organise factors of production and take risks
• What is Capital?

  Goods used in the supply of other products eg. tech
• How can you improve Quantity?

  increasing wages, more land, investing in more capital
• How can you improve Quality?

  investment in R&D, newer technology, higher skilled/more experienced labour
• How does the PPF show positive or negative economic growth?

  shift in/out
• What are the 3 questions of the basic economic problem?

  What goods and services should be produced?

  How should goods and services be produced?

  For whom should goods and services be produced?
• how does the PPF show opportunity cost?

  All the movements ALONG the PPC curve incur an opportunity cost. Some countries choose to produce more capital goods (the gain of capital goods at the loss of consumer goods) but it depends on the needs of the people
• what does it mean if there is a point on the inside of the PPF

  unemployed resources, not all resources are being used.
• What does it mean if there is a point on the outside of the PPF?

  unobtainable/impossible as the country does not have enough units to achieve this.
• what does it mean if there is a point on the PPF?

  Capital and Consumer goods are both being produced efficiently, all resources in the country are being fully employed.
• how can economic growth be achieved ? (simply)

  anything that improves the quality or quantity of the FOP will shift the PPF out. more is produced without a trade off/opportunity cost
• What does the PPC tell us

  It shows the maximum number of goods that can be produced within a country if all the resources are being used
• What does the PPC look like?

  consumer on the y and capital goods on the x

  
• What does the PPF/PPC stand for?

  The Production Possibility Frontier/Curve
• what are the 4 factors of production?

  land, labor, capital, entrepreneurship (CELL)
• How do opportunity costs effect the government?

  choose where to invest: welfare benefits, new hospitals, motorways
• How do opportunity costs effect producers?

  choose what to invest in: eg. advertising, better technology, labour, machinery.
• How do opportunity costs effect consumers?

  they have to choose how to spend their limited budgets out of their disposable income. eg. going out vs buying school supplies vs ordering food.