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Table of Contents
Scarcity and Choice .......................................................................................................................... 2
Economic Resources ........................................................................................................................ 6
Factor Rewards ............................................................................................................................... 10
The Production Possibility Frontier ................................................................................................. 14
Specialisation and Trade ................................................................................................................ 18
Positive and Normative Statements ................................................................................................ 22
Markets: Understanding Demand ................................................................................................... 23
Markets: Understanding Supply ...................................................................................................... 30
Markets: Finding an Equilibrium Price ............................................................................................ 36…

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Scarcity and Choice


Road space throughout the world is
becoming increasingly scarce as the
demand for motor transport increases each
year ­ what do you think are some of the
best solutions to reducing the problem of
congestion on our roads?




The Economist's Dictionary of Economics defines economics as…

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For a perspective on the achievements of countries in meeting people`s basic needs, the Human
Development Index produced by the United Nations is worth reading.

IKEA sells to millions of consumers
throughout the world ­ does it meet our
needs and wants?




Making choices

Because of scarcity, choices have…

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Typically we tend to assume that, when making decisions in the market place, people aim to
maximise their welfare. They have a limited income and they seek to allocate their money in a
way that improves their standard of living.

Of course in reality consumers rarely behave in a…

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distribution is decided by the state. In such a system, market prices play little or no part in
informing resource allocation decisions and queuing rations scarce goods.
4. Mixed economy: In a mixed economy, some resources are owned by the public sector
(government) and some resources are owned by…

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Economic Resources

Finite resources and sustainability

There are only a finite - or limited - number of workers, machines,
acres of land and reserves of oil and other natural resources on the
earth. Because most resources are finite, we cannot produce an
unlimited number of different goods and services.…

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An increase in the size and the quality of the labour force is vital if a country wants to achieve
sustained growth. In recent years the issue of the migration of labour has become important.
Can migrant workers help to solve labour shortages? What are the long-term effects on…

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Infrastructure is vital in achieving sustained economic growth

Entrepreneurship

An entrepreneur is an individual who seeks to supply products to a market for a rate of return
(i.e. to make a profit). Entrepreneurs will usually invest their own financial capital in a business
and take on the risks. Their…

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Hydrogen refuel station unveiled (BBC news, July 2008)
Wind power ­ the future? (BBC news, June 2008)




© Tutor2u Limited www.tutor2u.net

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Factor Rewards




Factors of production are used to create output to be sold in markets. Each factor used in
production can expect some reward:

Income

The main sources of income for people are:
1. Wages and salaries from work often boosted by overtime and productivity bonuses.
2.…

Comments

? Secret - Team GR

Love it.. very helpful indeed ! Thank you :)

Sam

Thanks greatly appreciated....

Merz

Thank you!/

Have you got Unit 2 please?

bboodoo123

link does not work... :(

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