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economia - Coggle Diagram

- - - - land
        
        Land is any natural resource used in production.
        Natural resources can be renewable or non-renewable.
        Land is geographically immobile but occupationally mobile
      - labour
        
        Labour is all the human effort involved in the production of goods or services. The more the human capital, the more the worker should be able to produce.
        The supply of labour is influenced by the number of workers available and by the number of hours for which they can work
      - capital
        
        Capital goods or producer goods are any manufactured goods used in the production of other goods or services.
        The supply of capital goods tends to increase over time
        Gross investment =the value of the output made by the capital good.
        Depreciation= the monetary value of the capital good
        Net investment= gross investment- depreciation
      - enterprise
        
        Enterprise is the risk bearing and decision making in business.
        The shareholders bear the risk of losing money in case of failure, managing directors make decisions
        Enterprise is the most geographically and occupationally mobile factor of production
  - - - opportunity cost is the best alternative forgone
    - - economic goods=goods which require resources to be produced :arrow_right:involve opportunity cost
        free goods: goods which do not require resources to make it :arrow_right:do not have opportunity cost
    - - A curve which shows the maximum output of two products and the combination of those products that can be produced with existing resources and technology
- - - - Economies need determine: what to producce, how to produce it and who will recieve the product.
        There are three main economies systems
        
        planned economy= an economy where the government makes the crucial decisions, land and capital are state owned and resources are allocated by directives
        Advantages of government interventions :smiley:: a better evaluation of costs and benefits of products on society, finance of non-chargeable products, prevent exploitation, maximum use of resources, protect workers and vulnerable groups.
        
        Market economy= an economy where consumers determine what is produced, resources are allocated by the price mechanism and land and capital are privately owned. Firms may be capital intensive or labour intensive based on which costs less.
        Advantages: :smiley: quick responses to the change in the consumer demand; choice for consumers, firms and workers; efficiency.
        Disadvantages: :frowning_face: It may occur market failure due to: selfishness on the decision of the firms; affirmation of monopolies; firms not being able to respond to the consumers' desires; firms not willing to produce free services; consequences of advertising; uneven distribution of income.
        
        Mixed economy= an economy in which both the private and the public sectors play an important role. Its aim is to gain the advantages of both a market economy, and a planned economy.
        However market failure may always occur and governement intervention could worsen the situation.
    - - Over the last decades there has been a decline in the number of planned economies in the world
  - - - Markets may may experience a problem of failing on taking into account all costs and benefits (private, social and external), which will result as an over-production or an under-producion of the product.
        There may also be an information failure, a lack of information or a spread of inaccurate information given to suppliers, workers or consumers.
        Merit goods experience both information failure and problems in terms of social costs and benefits. Merit goods are goods that are very beneficial to the consumer and for third parties (e.g. healthcare). If left to market forces they will be under-produced. Some measures a government can adopt is providing information on the benefits, subsidies, providing it for free or making its consumption compulsory.
        Demerit goods are harmful to consumers and to third parties. They are over-consumed and over-produced. The government can discourage their consumption by imposing taxes, providing information, sponsoring health campaines or banning them. Most product, including merit and demerit goods are private goods when they are rival and excludable.
        Public goods are goods which are non-excludable and non-rival, because of that in a market system if left to market forces they won't be produced at all.