Nature + Purpose of economic activity

Question 1

Purpose

Answer 1

To produce G+S which satisfy consumer needs + wants.

Question 2

Purpose requires …

Answer 2

using resources (inputs - FoP) to produce outputs (G+S).

Question 3

Economists + scarce resources

Answer 3

Economists have to make decisions about how to use scarce resources.

Question 4

1) What is to be produced?

Answer 4

Gov. + private sector consider this and distribution of each good. Need to be careful about decision due to OC.

Question 5

2) How should it be produced?

Answer 5

Considers distribution of each good + rewards from each FoP.
Firs consider cost + productivity of each factor to help them decide between labour intensive + capital intensive production.

Question 6

Firms aim to …

Answer 6

Minimise costs + maximise profits, meaning production needs to be efficient.

Question 7

3) Who will benefit from G+S produced?

Answer 7

Consumers with purchasing power can benefit from G+S produced.
Those willing + able to pay the price charged will get the G/S.