Micro-economics: Scarcity and choice:
Scarcity and choice:
Factors of production:
resources used in the production process. inputs into production including land, labour, capital and entreprenuship
Capital - Machinery or technical influence
Enterprise - Firms, organises production baring the risk of the activity
Labour - Human influences, workers and human resource
Land - Natural resources such as raw materials or the land that is rented
: where an economy focuses its resources and labour on one good or service. Inorder to increase its output and focus
Benefits of specialisation - firms can achieve economies of scale, more efficiency in production and tackles the problem of scarcity.
Costs of specialisation - can lead to boredom in the labour force, less self sufficient economy and lack of flexibility in the economy.
Specialisation can lead to surplus output that can then be traded internationally.
Are a person, company or organisation that can influence the economy by buying, selling, producing or taxation.
Firms - In order to produce output of goods or services, maximisation of their profits
Government - Influences economy through taxation and regulation of markets
Households - make choices about their expenditures,
decisions of the supply of their labour
: a situation that arises because people have unlimited wants in the face of limited resources
Forces people to make choices between good and services to satisfy wants.
Choices need to take in to account long term implications
Division of labour:
a process where by the production procedure is broken down it in to small stages, and assigned sections.
Can gain productivity and lower the supply cost per unit and in theory lower prices for consumers of goods and services.
Normative statements : Are statements involving a value or judgement and can't be tested
Positive statemnets: Are statements based on facts . I.E what is. These can be tested.