GCSE+Economics+Rev+Week+1

The economic problem The economic problem The fact that resources are scarce and our wants are infinite gives rise to the basic economic problem. How do we decide to allocate the limited resources? Economic agents (individuals, firms, governments etc.) have to make choices regarding what to do with their limited resources. Typically economics can be defined as how scarce resources are used to meet unlimited human wants.

Factors of Production

There are four Factors of Production; How to remember: CELL

CAPITAL; this refers to all the tools, buildings, machines etc that are used in production of goods. ENTERPRISE; this is what entrepreneurs do: think of ideas, organise the other three factors of production and take risks with their own money and the financial capital of others. LAND; not only the land that the business is on but the natural resources as well, e.g. gold, oil, fish, wheat. there are two types of land; LABOUR; the workers of the workforce. All workers possess different qualities.
 * non-renewable resources e.g. oil, gas and copper,
 * renewable resources e.g. fish, forests and corn

Opportunity Cost Is the benefit from the next best alternative that is given up in order to produce or consume something. Examples: 

=<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Key Terms Unit 1 =


 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Factors of production
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Land
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Labour
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Capital
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Entrepreneurship
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Durable consumer goods
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Non durable or perishable consumer goods
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Consumer Services
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Capital Goods
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Semi finished goods/components
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Business Services
 * <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Opportunity cost

=<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Now attempt the following activity: =

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">