Chapter 1.1 - Main Economic Groups and Factors of Production
Main Economic Groups
Government - A political authority that decides how a country is run and manages its operation
Producer - A person, company or country that makes, grows or supplies goods and/or services
Consumer - A person or organization that directly uses a good or service
Consumers
Make choices about their spending
To make these decisions consumers weight up their benefits gained from using the good against the price they would have to pay to obtain it
Consumer is an end-user of a good
Consumers tend to mostly act on an individual basis, but don't have a huge amount of influence on production of goods and services
In economics consumers buy goods or services for their own personal use rather than for use in production
They may need protection against more powerful producers who dominate, these producers cal control the price, quality and quantity of a good, and as a result the government may intervene with regulations
Producers
They make choices about what and how they produce
They have influence over the quantity, prices and quality of a good they produce
Producers supply goods and services
Government
They can influence price, quantity or quality of a good or service
They can act both as a buyer and producer of goods and services
A government is a group of people that has the power to run a country
Make and enforce rules within a country
Affect the economy with many of their policies
Spend money in an economy
Transfer money to individuals
Interdependence
Where one group responds to the actions of another group
Factors of Production
Labour
Land
Enterprise
The resources in an economy that can be used to make goods and services
Capital
These are all raw materials that are naturally occuring
For example: Oil, Coal, Trees, Water, The Sea, The ground
Refers to the natural resources in an economy
Refers to the human resources that are available
Depends on size of population, impact of migration and the working age within a country
It is also affected by the quality of the labor so the extent of education, training and health of population have an impact
Enterprise is when the other factors of production are organized to make goods and services
It requires an individual or organization to tackle 2 key areas
To organize production and to bear the risks of the project
Capital covers human-made aids to production
It includes artificial resources that are inputs used to produce more goods and services
For example: Machinery, Tools, Factory Buildings