Micro 2

Question 1

What is capital?

Answer 1

Capital:
Paid through interest
Tools and equipment
Physical man made recourses

Question 2

What is enterprise?

Answer 2

Enterprise:
The person who organises the business and the person who takes the initial risk by investing their recourses into the act of production
Paid by profit

Question 3

What is land?

Answer 3

Land:
Naturally occurring recourses such as gold ore, oil and fish
Paid by rent (renting land)

Question 4

What is labour?

Answer 4

Labour:
Physical and mental effort of people who make the goods and services
Payed through wages

Question 5

What is the difference between economic and free goods?

Answer 5

Economic goods are scarce so they have an opportunity cost to being used free goods are in abundance therefore have no opportunity cost

Question 6

What is a PPF?

Answer 6

A diagram used to illustrate the maximum quantities of two goods that can be produced in any combination over a given period of time. Also known as the production possibility frontier. Any point in the curve is a point of productive efficiency. Anything below represents an unemployment of recourses anything above the PPF would be over producing which is not sustainable.

Question 7

What is productive efficiency?

Answer 7

A situation which a producer or economy is making full use of the recourses available