Microeconomics General Flashcards
What are the Factors of Production?
The Resources avilable in an economy for the production of goods and services:
Capital - Man made resource
Enterprise - Business venture made by individual
Land - Planets natural resources
Labour - Human input or workforce
Economic Problem
Wants are inifinte but resources are scarce, so choices are made at to how to best allocate those resources.
Scarcity
Limited/Finite resources which are insufficient in meeting infinite wants.
Opportunit Cost
The value of the next best alternative forgone when choices are made.
Production Possibility Curve (PPC)
It represents the maximum output combinations of 2 goods produced given a fixed level of resources.
Economic Growth
Increase in productive capacity of an economy - Shift outwards on PPC.
Productive Potential
The maximum output an economy i capable of producing.
Pareto efficiency
Where one person cannot be made better off without someone else being made worse off. - Anywhere along the PPC.
Productive efficiency
Production occours at the lowest possible cost.
Allocative efficiency
Consumer satisfaction maximised. Where scarce resources are used to produce the goods and services that consumers actually demand in quantites they desire at a price they want.
Division of Labour
The production process is broken down into seperate tasks - Workers specialise.
Specialisation
The concentration of a worker, group of workers, firms, region, or the whole ieconomt in the production of a narrow range of goods.
Exchange
The process by which goods and services are traded.
What is need and how it differs from want?
Need is for the things we actually NEED to survive ie. Food, Water, Shelter, Warmth. Whereas want is anything consumers desire regardless of cost.
Economic System
The organisation of production, by Gov or D&S. A mix of both (Mixed Economy).
