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Economic Resources - Coggle Diagram
Economic Resources
Factors of Production
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Capital: Goods used in the supply of other products e.g. tech
Interest from savings + dividends from shares
Objectives
Producers/firms wish to maximise profits, by producing at minimum cost goods and services that are desired by consumers. Profit = total revenue - total costs.
Rational consumers wish to maximise their satisfaction or utility from consumption by correctly choosing how to spend their limited income.
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Positive Statements
Objective statement that can be tested, amended or rejected by referring to available evidence
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e.g. falling price of crude oil on world markets will lead to a fall in demand for fuel efficient cars
Opportunity Costs
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investing today for consumption tomorrow: opportunity cost of an economy investing resoruces in capital goods is the production of consumer goods given up for today
Economic Systems
Free Market: Allocate resources
Driven by profit margin
Limited role for state
Private sector dominates
Mixed Economy:
Mix of state and private ownership
Gov intervention in markets
Mix will vary from country to country
Planned Economy:
Most resources are state owned
Planning allocates resources
Little role for market prices
Normative Statements
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for example, unemployment is more harmful than inflation
Capital/Consumer Goods
Capital Goods:
Goods used to make consumer goods and services
Capital inputs include fixed plant and machinery, hardware, software, factories and other buildings
Consumer goods and services:
Goods which satisfy our needs and wants directly.
Sub-division between:
-Consumer durables: products that provide a steady flow of satisfaction/utility over working life e.g. washing machine
-Consumer non-durables: products that are used up in the act of consumption e.g. drinking coffee
-Consumer services: e.g. hair cut or tickets to a show