Economics OCR Unit 1: How the markets work

Unit one: How the market works

The economic problem - Scarce resources infinite wants.

Scarce resources - Limited resources but many ways to use them.

Disposible income - Money left ever after spending on necessities and taxation

Opportunity cost -  What you miss out on when buying another good/service.

Economic choice - Deciding between different uses of scarce resources

Factors of production - Capital Enterprise Land Labour

Rewards of production - Capital = Profit, Enterprise = Interest, Land = Rent, Labour = Wages

Specialisation - Concentrating on one specific thing that producer is good at making to make more profit

Sectors of production - Primary - Extraction of raw materials, Secondary - Manufactoring of raw materials, Tertiary - The service sectors e.g Health care

 Chain of production - Primary --> Secondary --> Tertiary --> Consumer

…