Definitions Flashcards
Factor of production
- Resource inputs
- Available for use in an economy
- For production of goods and services
Goods vs services
- Goods are Tangible products
- Services are intangible products
Land
natural resources in an economy
Labour
The quantity and quality of human resources
Capital
Man made aids to production
Entrepreneurship
Willingness of an entrepreneur to
- Take risks
- Organise production
Factor endowment
- the stock of factors of production
Production
the output of goods and services
Want
anything you would like
- Irrespective of whether you have the resources and ability to purchase it
Scarcity
Situation where is there are
- Insufficient resources
- To meet all wants
Choice
The selection of appropriate alternatives
Opportunity cost
The next best alternative foregone.
Specialisation
- The concentration by a worker, firms, region or whole economy
- On the production of a narrow range of goods and services
Exchange
the process by which goods and services are traded.
Benefits of specialisation
- More output
- More choice
- Export led growth/higher income/productive efficiency
- Higher standard of living by moving away from subsistence
Risks of specialisation
- Unsustainable growth and depletion of resources
- Deindustrialisation and job losses
- Risks of a narrow income source
- Natural disasters destroying a year’s output
- Changing tastes and fashions - Interdependence and so Geopolitics, any unplanned shocks to the system likely to be felt in many other countries .e.g. Asian Tsunami, 9/11.
Division of labour
- Specialisation of labour,
- Where the production process is broken down into simpler separate tasks
Productivity
output or (production of a good or service), per worker , (per unit time)
Economic system
The way in which PRODUCTION IS ORGANISED in a country or countries
Market economy
an economic system whereby resources are allocated through market forces of supply and demand
Price system
A method of allocating resources by the free movement of prices
Command economy
- An economy system whereby most resources are state owned
- And resources are allocated centrally
Mixed economy
An economic system
- Where resources are allocated by
- A mixture of market and
- Direct public sector involvement
- Ownership of resources mainly private, but there is some public ownership.
Privatisation
The transfer of resources from public ownership to the private sector.
