Econ

• Economics


  A social science which studies how humans allocate scarce resources to meet their unlimited wants and needs
• Scarcity


  The degree to which the demand for a product outweighs its supply which drives the economy
• Choice


  The selection of one good or service over another
• Money cost


  The actual cost of a good or service
• Opportunity cost


  The next best alternative which is given up when a choice is made
• Goods


  Tangible items that are used to satisfy wants and needs
• Services


  Actions done that satisfy wants and needs. You can not see or touch a service but can see and touch the results of a service that has been performed
• Production possibilities frontier/curve/boundary


  A graphical representation of the possible levels of production for bundles of two goods assuming all resources are utilised
• Economic efficiency


  An economy where there is both full employment and full production
• Full production


  When the economy employs the best available methods (technology-aided) to produce goods and services
• Productive efficiency


  When resources are employed in the most efficient manner, and there is no waste
• Allocative efficiency


  The combination of goods produced is what is desired by society
• Full employment


  When the economy employs all its resources to produce goods and services
• Productive waste


  When resources are not employed in the most efficient manner
• Allocative waste


  When the blend or mixture of goods produced is not the combination desired by society
• Personal choice


  The desire for a good/service that is acted upon by a consumer. People generally purchase goods that they want or need
• Income


  The level of a person's income and how much can be purchased. If taxes and statutory deductions increase, people will have less money to spend. One must also note the level of a person's savings
• Bandwagon effect


  When someone buys a product because everyone else is buying it. This is usually the case when a good becomes highly popular among a certain group of individuals
• Level of education


  The higher the level of education, the more money a person will have at his disposal. This can increase his spending and savings over time
• Peer pressure


  Persons will spend or save based on influence from peers. For example, saving to buy a Blackberry or going to KFC on Fridays
• Firms


  Production units, organized to produce goods and services used by the households
• Cost of production


  When the cost of production increases the output of FIRMS generally increases. This occurs because the goods/ services become less profitable and it is better to divert investments to more profitable goods
• Resource base


  The quality and quantity of resources available to a firm
• Industrial relations


  The relationship between employers and employees must be good. If harmony does not exist, it will have a negative impact on the firm and productivity will be low. It is also necessary to project a good corporate image
• Change in demand


  When there is a fall in demand for a product the FIRM will produce less of the item and vice versa
• Taxes


  Taxes may be added to the price of a good which would help to limit the consumption of that good. E.g. Tax placed on cigarettes. A tax may be placed on the production of a good to limit how much is created
• Industrial zones


  These encourage and facilitate the activities of firms by giving them a safe space in which to operate
• Provision of infrastructure


  The government can enhance business by providing access to clean running water, good roads, garbage collection, access to electricity etc. This increases the chances of consumers and supplies being able to access the business easily
• Factors of production


  All economic resources that are used in the production of a good or service
• Land


  The naturally occurring resources that are used to produce a good or service. Land includes the physical land and everything on and in it. Land also includes all water bodies and the atmosphere and everything contained within them
• Labour


  All human effects which are used in the production process
• Division of labour


  When a large task is split up into smaller more manageable tasks
• Specialization of labour


  A situation in which a person does a task repeatedly and becomes an expert at it
• Labour force


  The number of persons in an economy of legal working age who are willing to work
• Capital


  Man-made goods used to produce other final goods
• Working capital


  Raw materials and intermediate goods used in the production process
• Fixed capital


  The factories and machinery used in the production process. This is also called physical capital
• Social capital


  Infrastructure provided by the government to improve economic output. These include roads, schools, hospitals etc.
• Human capital


  All the knowledge, skills, attitudes, aptitudes and characteristics possessed by a person
• Entrepreneurship


  The act of taking the necessary risks required to combine the other factors of production in order to operate a profitable business