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Chapter 1 The Market System, Access Ch1 notes here!(https://drive.google…

- - - - Labour
      - Capital
        
        Common examples of capital include machines, buildings, factories, offices, tools and equipment.
      - Entrepreneurship
        
        Entrepreneurship refers to the managerial ability that involves the organising of factors of production and entrepreneurs are rewarded in the form of profits by taking the risks related to the production of goods and services.
      - Land
    - - Choice
        
        Opportunity cost is the value of the next best alternative forgone when a choice is made.
        
        Scarcity necessitates choice and choice involves opportunity cost.
- - - - Marginalist Principle
        
        Marginal cost is the additional cost incurred from consuming or
        producing one more unit of the good/service.
        
        Marginal benefit refers to the additional benefit gained from
        consuming or producing one more unit of the good/service.
      - Consumers aim to maximise utility (benefit or satisfaction consumers receive when they consume a good or service, subject to their budget constaint).
        
        (refer to pg8 of ch1 notes for diagram)
      - Workers aim to maximise their welfare at work.
      - Firms aim to maximise profits.
      - Governments aim to maximise social welfare, subject to the
        government budget constraint. (debatable)
  - - - intended consequences, unintended consequences
  - - - Productive efficiency is achieved when the firms in an economy are producing the mximum output for the given amount of inputs, or producing a given output with the least cost combination of inputs.
      - Allocative efficiency is achieved when the current combination of goods and services produced and consumed allows the society to attain the greatest level of satisfaction.
    - - Assumptions of the PPC
        
        The economy only produces two goods or services.
        
        Production is observed over a specific time period, e.g. one year.
        
        The quantity and quality of the resources used remain the same over the specific time period.
        
        Resources are fully employed and efficiently utilised.
        
        There is no change in the level of technology.
      - What the PPC illustrates
        
        Scarcity (points outside the curve), constraint (can only produce at points within or on the curve), choice (choose among the attainable combinations), opportunity cost (downward slope), productive efficiency (points on curve), unemployment & underemployment (points within curve), allocative efficiency (one point on curve).
        
        Concept of increasing opportunity cost (as illustrated by concave PPC curves)
        
        (refer to example on pg17 of ch1 notes)
        
        Economic growth & shifts of the PPC
        
        Actual economic growth
        
        On the PPC diagram, it can be illustrated by an outward movement from a production point within the PPC to one closer to or on the PPC.
        
        Potential economic growth
        
        It is illustrated by an outward shift of the PPC.
        
        Increase in quantity of resources.
        
        Skewed shift v.s. Parallel shift
        
        1 more item...
        
        Increase in quality of resources.
        
        Technological advancement.
      - (refer to pg15 of ch1 notes)