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Section 1: THE BASIC ECONOMIC PROBLEM. The nature of the economic problem. Learning summary. By the end of this chapter, you should understand: what is meant by wants and how these differ from needs. why resources are scarce and why this can explain the so-called ‘economic problem’. the difference between economic goods and free goods.
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1. Define the difference between normative and positive questions. 2. Differentiate between intermediate and final goals. 3. Discuss the relationship between economics and well being. 4. Define the four essential economic activities. 5. Illustrate tradeoffs using a production possibilities frontier. 6. Explain the concept of opportunity costs ...
- By the end of this chapter you will be able
- Introducing the topic
- KEY
- 1.1 Finite resources and unlimited wants
- KEY TERMS
- The continuing nature of the economic problem
- The economic problem in diff erent contexts
- GROUP ACTIVITY 1
- 1.2 Economic goods and free goods
- Economic good:
- GROUP ACTIVITY 2
- You should know:
- Multiple choice questions
- By the end of this chapter you will be able to:
- 2.1 The importance of factors of production
- Land
- KEY TERMS
- Labour
- KEY TERMS
- Capital
- GROUP ACTIVITY 1
- Enterprise
- The mobility of land
- INDIVIDUAL ACTIVITY 1
- The mobility of labour
- The mobility of capital
- KEY TERMS
- Mobility of labour:
- Mobility of capital:
- GROUP ACTIVITY 2
- The mobility of enterprise
- entrepreneurs.
- INDIVIDUAL ACTIVITY 2
- The quantity of land
define and give examples of the economic explain the diff erence between economic
Do you have everything you would like to more goods and services. These are the people for survival. If our needs for suf icient food,
other products. Indeed, our wants are unlimited. better, quality products we would like. Many Wants: goods
What stops people enjoying all the products they would like to have is a lack of resources to produce them. Resources, including workers and machinery, are scarce. This means that they are limited in supply. The economic problem of not being able to satisfy everyone’s wants
arises because of this scarcity. There is no limit to people’s wants – they are infinite. For instance, people want more and better clothing, healthcare and improved transport infrastructure. The number of workers, machines, of ices, factories, raw materials and land used to produce these goods and services, however, is finite. At any given time, f...
Resources: factors used to produce goods and services. The economic problem: unlimited wants exceeding finite resources. Scarcity: a situation where there is not enough to satisfy everyone’s wants. Scarcity continues to exist. More goods and services are being produced today than ever before, but the growth in wants is exceeding the growth of econo...
The fact that people have to choose which products to buy, which subjects to study, what jobs to do and which products to produce shows that there are insuf icient resources. As consumers, we cannot have everything we want. We have limited incomes. Students have to select which courses to study. It is not possible to study economics and chemistry a...
In your group, discuss and decide which of the following are scarce: vacancies for university degree courses b foreign holidays healthcare.
The vast majority of goods and services are economic goods. This means that it takes resources to produce them and so they are limited in supply. For example, a carpet is an economic good. The material and labour used to produce it could have been used to make
a product which 4 requires resources to produce it and therefore has an opportunity cost. Free good: a product which does not require any resources to make it and so does not have an opportunity cost. another good (or goods). It is easy to find examples of economic goods. Almost every good and service you can think of is an economic good. Your educ...
In your group, discuss and decide whether each of the following is an economic or a free good: air education newspapers public libraries state education.
People’s wants continue to grow. Resources such as workers, machines and land are limited in supply. The economic problem is that unlimited wants exceed finite resources. Economic goods take resources to produce them. Free goods exist without the use of resources.
Why does scarcity exist? Each year workers tend to produce less than previously Machines wear out with time There are not suficient resources to produce all the products people want There is a limit to people’s wants Why will scarcity continue to be a problem in the future? Prices will rise The quantity of resources will decline Wants will continue...
define and give examples of land, labour, capital and enterprise explain the nature of each factor of production analyse the influences on the mobility of factors of production discuss the causes of changes in the quantity and quality of the factors of production identify the payments to the factors of production
People are living longer because healthcare, education, housing, sanitation and nutrition have improved. This, in turn, is because of increases in the quantity and quality of factors of production. Factors of production is another term for economic resources. Chapter 1 explained that economic resources are used to produce goods and services, and th...
Land in general terms includes the earth in which crops are grown, and on which ofices and factories are built, but in economics it has a wider meaning. It covers any natural resource which is used in production. So besides the land itself, it also includes what is beneath the land, such as coal, what occurs naturally on the land, for example rainf...
Factors of production: the economic resources of land, labour, capital and enterprise. Land: gits of nature available for production.
Labour covers all human efort. This includes both the mental and the physical efort, involved in producing goods and services. A road sweeper, a steel worker and a bank manager all contribute their labour. Confusingly, we sometimes also refer to human capital. This means the education, training and experience that workers have gained. The more huma...
Labour: human efort used in producing goods and services. Capital/capital goods: human-made goods used in production.
Capital would have to be used in the diversion of the course of a river. Capital is any human-made (manufactured) good used to produce other goods and services. It includes, for example, ofices, factories, machinery, railways and tools. Capital is also referred to as capital goods and producer goods. Economists distinguish between capital and consu...
In your group, discuss and decide which of the following are capital goods and which are consumer goods: a chocolate bar a car a child’s toy a farm tractor a dentist’s drill a courtroom.
Enterprise is the willingness and ability to bear uncertain risks and to make decisions in a business. Entrepreneurs are the people who organise the other factors of production and who crucially bear the risk of losing their money if their business fails. Entrepreneurs decide what to produce by taking into account consumer demand and how to produce...
Most land is occupationally mobile. This means that it can be used for a number of purposes. Land which is currently being used for farming may be used instead to build houses. Trees can be used to make tables or sleepers for railway lines. Land, in its traditional sense, is geographically immobile. It is not possible to move a section of land from...
Identify two forms of land that are used by a paper mill.
The mobility of labour varies. Some workers may find it dif icult to move from one area of the country to another, or from one country to another (geographical immobility), and some may find it dif icult to switch from one type of job to another type (occupational immobility). The causes of geographical immobility include: Diff erences in the price...
The geographical and occupational mobility of capital varies according to the type of capital goods. Some types of capital goods can be transferred from one part of the country to another. A photocopier used by a bank in one area of a country can be sold to, and then used by, a bank in another area. A coal mine and a dock, however, are fixed in pos...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply. Other natural resources, however, can change quite significantly. Rainforests are currently declining at a rapid r...
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The fundamental economic problem is that there are never enough resources to produce all the products people would like to have. Resources are limited in supply (inite) whilst wants are unlimited (ininite). explain the role of the factor enterprise in a modern economy. draw and interpret production possibility curves.
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Definition. A trough is the lowest point in the business cycle, marking the end of a period of declining economic activity and the transition to recovery. During a trough, economic indicators such as GDP, employment, and consumer spending hit their lowest levels before beginning to rise again.
May 19, 2021 · A trough, in economic terms, can refer to a stage in the business cycle where activity is bottoming, or where prices are bottoming, before a rise. Key Takeaways
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A trough in the business cycle represents the lowest point of economic activity, marking the end of a recession and the beginning of an economic recovery or expansion. At the trough, key economic indicators such as GDP, employment, and consumer spending reach their lowest levels.
