Theme 4 (1)

  • Created by: LukeKeogh
  • Created on: 03-05-19 08:58
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  • Theme 4
    • Indications of growth
      • GDP will rise as total output rises in accordance to the economic growth
      • HDI will improve as all factors are improving (life expectancy, education and gross national income)
    • Specialisation
      • When a business focuses its production effort on one particular task or on one particular product
      • Benefits
        • Increased productivity and output = reduced average costs and economies of scale
          • The increased output leads to GDP growth 
        • Due to the reduction in costs, the business can lower their costs - can result in demand rising or their profits will rise due to the lower costs
      • Cons
        • Business might become overly reliant on one product
          • Does not spread risk
        • If the business grows too big it may suffer from diseconomies of scale through lack of communication and co-ordination
        • Other business may copy and specialise in the same product
    • Competitive advantage
      • the idea that a business should specialise in any area where it can perform better than its competitors
    • Comparative advantage
      • the ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals
    • Foreign Direct Investment
      • When a business in one country invests in a business in a separate country

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