Economic chapter 1

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  • Economic
    • Basic Economic Problem
      • The allocation of scarce resources between unlimited wants.
      • Economic Scarcity
        • The lack of resources.Because of unlimited needs, people need to decide between what resources to use
    • Opportunity Cost
      • Opportunity cost is the value of the next best alternative forgone after deciding
      • Example1: You buy a cabbage instead of a broccoli.The broccoli is the opportunity cost.
      • Example2: You use a plot of land for a motorway instead of a farmland. The farmland is the opportunity cost
    • Different Types of Goods
      • Free Goods and Economic Goods: Free goods do not cost money (Eg: The Sun), whereas economic goods do.
      • Public Goods: The goods and services a government provides, which do not need to be paid for. For instance,street lighting provided by the government is a public good.
      • Merit Goods: These are goods are provided by the government because it thinks that people ought to benefit from them,even if they cannot afford to buy them.The government can do this to benefit the economy. Examples of merit goods are health care and education
    • The Four Factors of Production
      • Land: Natural resources. Eg: fertile soil vital to the growth of plants,seas and rivers of the world
      • Labour: Related to the production by people, who provide the physical and mental effort to make goods and services provide human resoruces
      • Enterprise: The skill and risk taking ability of the person who brings together all the other factors of production together to produce goods and services.
      • Capital: Human-made goods( or means of production) which are used in the production of other goods.These include machinery,tools and buildings

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