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LC Econ Intro-FofP
LC Economics- Intro and Factors of Production
| Question | Answer |
|---|---|
| Economics | Is a social science which studies human behaviour in relation to peoples aims and the scarce resources available to them to achieve these aims, knowing that the resources have alternative uses. |
| Needs | Are the essentials required for survival in life. These are basic food, clothing and shelter. |
| Wants | Are anything in excess of our needs. Examples of wants include luxury items such as CD's, designer clothes and holidays. |
| Factors of Production | Are those resources which we use to produce wealth. |
| Land | Is anything provided by nature which helps to produce wealth. Land is fixed in supply and has no cost of production. |
| Labour | Is any human effort which helps to create wealth e.g. Builders |
| Capital | Is anything made by man which is then used in the production of wealth e.g. Factories, Machines. |
| Enterprise | Is that special human activity which organises the other factors of productions and bears the risk involved in production. |
| Opportunity Cost | Is the item you must do without when you have to make a choice between two items you want to purchase or produce. |
| Externalities | Are the unintended side effects of a calculated decision to do something. |
| Wealth | Is a stock of goods and services i.e. goods which you have accumulated over time. |
| Income | Is a flow of goods and services i.e. it is possible to have a very high standard of living and to spend all of your earnings and have nothing to show for them. |
| Macroeconomics | Is the study of the entire economy in broad terms e.g. total income in the economy, total level of employment and the total amount of production. |
| Free Enterprise System | Under this system all resources are privately owned and individuals are allowed to pursue their own self interest. E.g. USA |
| Centrally Planned System | Under this system all resources are publically owned and this system claims the ownership of the means of production. Government control of all areas of economic activity, E.g. Cuba |
| Mixed Economy | Under this economic system it allows most of the major production and distribution decisions to be made by the private sector, but the government intervenes to ensure the supply of essential goods to everybody. E.g. Ireland. |
| Microeconomics | Deals with the individual units in economics and the interaction between them. e.g. consumer, household and firm. It deals with supply and demand, showing how goods will be produced and consumed at given market prices at given times. |
Created by:
MrFromholz
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