Nat 5 Economics Guaranteed Success
The basic economic problem ️️the mismatch of unlimited wants and needs and limited resources.
Why do we have unlimited wants ️️greed, successful advertising and innovation
Why do we have limited resources ️️Scarcity of goods cause limited resourc...
The basic economic problem ✔️✔️the mismatch of unlimited wants and needs and limited resources.
Why do we have unlimited wants ✔️✔️greed, successful advertising and innovation
Why do we have limited resources ✔️✔️Scarcity of goods cause limited resources
What the difference between a need and a want? ✔️✔️- A need is something you need for survival eg.
Food and water
- A want is something that makes ur life more pleasant (luxury) e.g TV and phone
What are the factors of production and their returns ✔️✔️-Land (all natural resources. eg. Forrests).
The return from land is rent.
-labour (all Human Resources. eg. Builders and dentists). The return from labour is wages
-capital (all man made resources to aid production. eg. Machinery and roads) the return from capital is
interest
-enterprise (organises the other factors of productions, normally self employed. Eg. Farmers etc) the
return from enterprise is profit
Opportunity cost and an example ✔️✔️-The sacrifice of the next best alternative and all its forgone
benefits
-for example if you had to choose an iPad or and iPhone and you chose the iPhone. The opportunity cost
would be the iPad and all its benefits p.
, Opportunity cost for consumers, firms and governments ✔️✔️CONSUMERS- consumers have a limited
income to buy all they want. Therefore have to decide how too spend there income on what would give
them the greatest satisfaction.
FIRMS- firms have limited resources to produce all they would like therefore have to decide what too
produce in order to make the most profit
GOVERNMENT- governments have limited tax revenue therefore have to choose what too spend their
revenue on to benefit society the most
Resource substitution ✔️✔️Replacing one factor of production with another. Most commonly labour
is replaced with capital. This has the following benefits:
• Reduces costs as no wages
• Less error
• Greater speed-machines don't tire
There are the following disadvantages:
• Unemployment
• Not all jobs can be automated
• Machines are expensive
Occupational mobility of resources ✔️✔️The ability of a resource to change use. For example, a
factory being used to produce different goods
What is demand ✔️✔️The willingness and ability to buy a good or service at a given price
Why does the demand curve slope downwards ✔️✔️Substitution effect- consumers will substitute out
of the market into competitor markets
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