1.1 + 1.2

• The three main economic groups, by definition, are:

  • Consumers -> ''A person or organisation that directly uses a good or service.''
  • Producers -> ''A person, company or country that makes, grows or supplies goods and/or services.''
  • Governments -> ''A political authority that decides how a country is run & manages its operation.''
• The roles of the three main groups are:

  -Consumers buy goods and services for personal consumption and make choices about spending.

  -Producers supply goods and services and make choices about what should be produced and how much.

  -Governments make and enforce rules for firms and consumers. They spend money in an economy and introduce taxes.
• The four types of factors of production are: land, labour, capital, enterprise. They all interdepend upon one another.
• Factors of production are defined as ''the resources in an economy that can be used to make goods and services e.g. land, labour, capital and enterprise.''
• • Labour is defined as ''The workforce of an economy in terms of both the physical and mental effort involved in production.''
  • Land is defined as ''The factor of production that is concerned with the natural resources of an economy, such as farmland and mineral deposits.''
  • Capital is defined as ''Any human made aid used in production''
  • Enterprise refers to entrepreneurs. They are risktakers who are required to organise (and bring together) the different factors of production, that are needed to produce a good or service.
• The economic problem is that there are infinite wants and finite resources, resulting in scarcity. Because of this, choices need to be made as to where to allocate these resources.
• • Infinite/ unlimited wants is defined as ''the infinite desire for something''
  • Finite/ scarce resources is defined as ''When there is an insufficient amount of something to satisfy all wants''
  • The economic problem is defined as ''How to best use limited resources to satisfy the unlimited wants of people''
• In order to make choices, economists use opportunity cost, which is the benefit of the other good which is given up. This is defined as ''The next best alternative given up when making a choice''. When applying this concept, remember to identify the benefit which is lost and not just the good/ service you can longer have.
• An economic choice is defined as ''An option for the use of selected scarce resources''
• Evaluating the costs + benefits of economic choices:

  • Regard sustainability for the environment, economy and social areas.
  • In other words, cost/ benefit analysis
• Definitions:

  • 'Economic sustainability': The best use of resources in order to create responsible development or growth, now and for the future.
  • 'Social sustainability': The impact of development or growth that promotes an improvement in quality of life for all, currently and into the future.
  • 'Environmental sustainability': The impact of development or growth where the effect on the environment is small and possible to manage, currently and into the future.