Economics

• Factors of production


  • Land
  • Labour
  • Capital
  • Entrepreneurship
• Primary sector


  Extraction of raw materials
• Productivity


  Efficiency of production, indicating the output produced per unit of input
• Division of labour


  Breaking down the production process into specialised tasks performed by different individuals or groups, leading to increased productivity through specialisation and expertise
• Business costs


  • Wages
  • Raw materials
  • Rent
  • Utilities
• Revenues


  Income generated from selling goods or services
• Economies of scale


  Cost advantages due to increased production and scale of operations, leading to lower average costs per unit
• Diseconomies of scale


  Costs increase as a company grows beyond a certain point, potentially due to coordination issues, inefficiencies, or increased bureaucracy
• Competitive markets


  • Numerous buyers and sellers who interact freely to exchange goods and services
  • No single entity has significant control over prices
  • Market forces of supply and demand determine the equilibrium price and quantity
• Advantages of large firms

  • Economies of scale
  • Greater market power
  • Access to resources
  • Research and development capabilities
• Disadvantages of large firms

  • Bureaucracy
  • Coordination issues
  • Lack of flexibility
• Advantages of small firms

  • Lower costs
  • Agility
  • Personalised customer service
• Disadvantages of small firms

  • Limited resources
  • Limited market presence
• Monopoly


  A single firm dominates the market by being the sole provider of a particular product or service, often leading to limited competition, higher prices, and reduced consumer choice
• Oligopoly


  A market structure where a few large firms dominate the industry, having substantial market power and often engaging in strategic interactions, such as price fixing or colluding
• Labour market


  Interaction between workers and employers, where workers supply their skills and services in exchange for wages or salaries
• Changes in labour supply and demand

  Affect wages, employment levels, and working conditions
• Trade union activity


  Collective action by workers to protect their rights, negotiate better wages and benefits, and influence labour market dynamics
• Government intervention


  Actions taken by authorities to influence or regulate economic activities, such as policies related to taxation, subsidies, price controls, market regulations, and social welfare programs, aimed at correcting market failures, promoting competition, and ensuring social welfare
• Growth of firms


  The expansion of a business in terms of its size, market share, and operations
• Growth of firms


  1. Organic means (internal development)

  2. Mergers

  3. Acquisitions

  4. Strategic alliances
• Reasons for firm growth

  • Increase sales
  • Increase profits
  • Increase market presence
  • Achieve economies of scale
• Organization of production


  Managing the various elements of a business's operations to achieve efficient and profitable outcomes
• Elements of organization of production

  • Optimizing costs
  • Maximizing revenue
  • Generating profits
• Productivity


  The efficiency of production, indicating the output produced per unit of input
• Productivity


  Crucial for enhancing profitability
• Production


  The process of creating goods and services
• Land


  All natural resources used to produce goods and services
• Labour


  The physical and mental human effort used in the production process
• Capital


  Manufactured goods that are used to produce other goods and services
• Enterprise


  The factor of production that takes a risk in organising the other three factors of production. The individual who takes this risk is known as an entrepreneur.
• Human capital


  The knowledge and skills that workers acquire through education, training, and experience
• Capital intensive


  Production processes that use a high ratio of capital to labor inputs
• Labour intensive


  Production methods that make more use of labour relative to machinery
• Primary sector


  The part of the economy that draws raw materials from the natural environment
• Secondary sector


  The part of the economy that transforms raw materials into manufactured goods
• Tertiary sector


  The part of the economy that involves services rather than goods
• Deindustrialization


  The cumulative and sustained decline in the contribution of manufacturing to a national economy.
• Productivity


  The quantity of goods and services produced from each unit of labor input
• Piece rate


  Employees are paid according to how much output they produce