Economics OCR Unit 1: How the markets work

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  • Created by: Matty'
  • Created on: 03-12-13 18:30

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


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