PPC

Economics: the study of how to allocate scarce resources in the most effective way

• Economic problem: how to allocate scarce resources among alternative uses
• Household: group of people whose spending decisions are connected
• Want: anything you would like, irrespective of whether you have the resources to purchase it
• Scarcity: a situation where there are insufficient resources to meet all the wants
• Choice: the selection of appropiate alternatives
• Opportunity cost: the cost of the next best alternative forgone when a choice is made 

Factor of production: the resource inputs that are available in an economy for the production of goods (tangible products) and services (intangible products)

• Land: natural resources in an economy
• Labour: the quantity and quality of human resources 
• Capital: man-made aids to production e.g. machinery 
• Entrepreneurship: the willingness of an entrepreneur (someone bears the risks of the business and who organises production) to take risks and organise production 

• Factor endowment: the stock of factors of production
• Production: the output of goods and services

Specialisation (the concentration by a worker/workers/firm/region/economy on a narrow range of goods and services) and exchange (the process by which goods and services are traded)

Benefits of specialisation:

• increase in the output of goods and services: when compared to circumstances where each country has to provide itself with everything it needs
• widening of the…