Reasons Individuals Make Decisions

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  • Reasons Individuals Make Decisions.
    • The Economic Problem.
      • Everyone has basic needs in life however they have an infinite list of wants.
        • Theres a scarce amount of resources to accommodate these.
    • Factors of Production
      • Land
        • Natural resources found on the planet.
      • Labour
        • Human input into the production process.
        • Everyone has different skills and labour capabilities = Human Capital.
      • Capital
        • Man made, physical goods, used in the production of other goods.
        • Increases in the level of Capital is investment.
      • Enterprise
        • The entrepreneur provides the initial ideas.
    • Specialisation
      • Division of Labour: production is split into different tasks and specific people are allocated a task each.
      • Division of Labour increases efficiency therefore more goods and services can be produced.
    • Opportunity Cost
      • The benefits given up in order to choose the next best alternative.


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