section 1

• what is the economic problem?

  not being able to satisfy everyone's wants due to scarcity/ unlimited wants exceeding finite resources
• what are economic goods?

  products that require resources to produce it and therefore has an opportunity cost
• what is a free good?

  products that don't require any resources to make it so doesn't have opportunity cost
• explain why a car is an economic good?

  it takes resources to produce it, for example, machines and workers. the amount of cars produced depends on the quantity and quality of these resources
• what are the factors of production?

  land, labor, capital, enterprise
• land is the earth and nature available, also natural resources such as coal
• labour is the mental and physical human effort in producing goods and services
• capital or capital goods are the manufactured goods that are used in the production of other goods and services
• what are consumer goods?

  goods and services purchased by households for their own satisfaction, for example food and clothing
• goods are tangible products
• services are activities one person performs to another (intangible)
• what is enterprise?

  the ability to bear uncertain risks and key decision making. these are entrepreneurs
• what is occupationally mobile?

  land being capable of changing its use
• what is geographically immobile?

  land incapable of moving from one location to another
• what is mobility of labour?

  the ability of labour to change where it works or in which occupation
• causes of geographical immobility?

  differences in price and availability of housing in different areas, family ties, differences in educational systems, lack of information and restrictions on movement of worker
• causes of occupational immobility?

  lack of info about vacancies in other jobs and lack of qualifications
• what is mobility of capital?

  the ability to change where capital is used or in which occupation
• what is mobility of enterprise?

  the ability to change where enterprise is used or in which occupation
• the mobility of enterprise depends on the entrepeneur
• enterprise is the most mobile factor of production
• quality of land can increase by?

  use of fertilisers, stopping firms from polluting rivers and good drainage
• by what two factors is quantity of labour influenced by?

  number of workers and number of hours
• the number of workers available is influenced by what?

  size of population, age structure of population, the retirement age, school leaving age and attitude to working women
• number of hours people work for is determined by?

  length of average working day, full time vs part time, length of holidays taken, overtime and amount of time lost through sickness
• what is productivity?

  the output per factor of production in an hour
• what is Labour productivity?

  output per worker hour
• how can quality of labour be improved?

  better education, better training, more experience and better healthcare
• quantity of capital is influenced by investment
• what is gross investment?

  total spending on capital goods
• what is depreciation?

  the value of capital goods that have worn out or become obsolete
• what is net investment?

  gross investment-depreciation
• how to increase quantity of enterprise?

  more entrepreneurs, better education system and lower corporate taxes
• what is opportunity cost?

  the loss of the next best alternative when making a decision (the best alternative forgone)
• payments for factors of production?

  for land: rent, for labour: wages, for capital: interest, for enterprise: profit
• what is a production possibility curve ppc?

  a curve that shows the maximum output of two types of products and combination of those products that can be produced with existing resources and technology
• producing at any point of the curve represents productive efficiency of resources
• any point inside the curve represents inefficiency
• attainable production is any point on or inside the ppc but when point is outside, is unattainable
• a movement along a ppc shows that resources are being reallocated