NEEDS AND WANTS
NEED is a good or service essential for living
WANT is a good/service people would like to have, but which is not essential for living.
people's wants are unlimited (of course)
ECONOMIC PROBLEM - theres unlimited wants, but limited resources to produce goods & services to satisfy those wants.
FACTORS OF PRODUCTION - resources needed to prouduce goods/services. 4 factors of production & they are limited supply.
SCARCITY - is the lack of sufficient products to fulfil the total wants of the population.
4 factors of production
the problem of shortage of goods and services is
It's from having few factors of production aka resources of production.
LAND used to cover all natural resources.
from nature. includes: fields, forests, oil, gas, metals & other mineral resources
LABOUR - the efforts of people needed to make products
CAPITAL - this is the finance, machinery & equipment needed for manufacture of goods
ENTERPRISE the skill & risk-taking ability of person who brings other resources together to produce a good/service.
E.g: owner of business. aka entrepreneurs
we've seen that the factors of production are LIMITED.
this causes people to have to make a choice of what they really need.
we consider the other alternative when we choose
OPPORTUNITY COST is the next best alternative given up by choosing another item.
e.g choosing a holiday to hawaii rather than a shiny new car. (nice)
buying a new computer OR pay for a new advertising campaign?
SPECIALISATION & DIVISION OF LABOUR
DIVISION OF LABOUR when the production process is split up into different tasks & each worker preforms one of these tasks.
GOOD STUFF :)
output is increased!
- concentrates on what each worker is good at
- avoids wasting time moving people from one stage of production to another.
BAD STUFF :(
- workers may become bored from the same thing.
- the firm relies on outside suppliers & retailers who may be unreliable
BUSINESS - combine factors of production to make products which satisfy people's wants.
* to make a profit
owned by private individuals
aims for satisfactory level of profits - saves working long hours & paying high tax
- profits needed to pay return to owners.
* to increase added value
- selling price - cost of sales = added value
- pay extra to make good output. means they can charge high & get money back
- makes things better than before > expensive looking output > more profits
- make things look more fancy shmancy than they are = CHA-CHING! $$
i dont like to study
- make jobs secure
- increase salaries/status of managers
- open up possibilites & spread risks by moving into new market, new product
- obtain higher market share from sales growth
- when a firm is recently set up OR during a recession (like now!) :(
- new competitors make firms feel less secure
- it may cause the business to lower prices to survive even though = low profit
* provide a service
- owned by government
- main aim is to provide a service to public
e.g water/electricity supply
* objective conflicts:
DIRECTORS - growth
WORKERS - jobs
LOCAL COMMUNITY - enviroment/pollution/jobs
CONSUMERS - price and quality
OWNERS - profits, security
MANAGERS - salaries, status, control
WORKERS - incomes, job security, satisfying work
CONSUMERS - goods & services, quality, good value
COMMUNITY - jobs, clean environment, safe products
GOVERNMENT - un/employment, taxes