Unit 1.1: Introduction To Economics

Question 1

Factors of production

Answer 1

Capital: man-made resources

Entrepreneurship: skills required to successfully combine, organise and manage capital, land and labour

Land: natural resources

Labour: human resources (physical & mental effort of people)

Question 2

Opportunity cost

Answer 2

Highest value alternative foregone when making a decision
(Whatever is given up to do something else)

Question 3

Ceteris paribus

Answer 3

When all else are held constant
(Other factors are held constant when looking at the relationship between variables)

Question 4

Scarcity

Answer 4

The situation in which resources are finite whereas wants are infinite

Question 5

Rewards for factors of production

Answer 5

Land - rent

Labour - wage / salaries

Capital - interest; money can be borrowed for production and consumption purposes in oorder to purchase the capital equipment

Enterprise - profit