Theme 1
- Created by: April15
- Created on: 17-10-19 09:27
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TYPES OF GOODS
Public Goods -
- non-rival and non-excludable
- not produced at all in a free market
- e.g: streetlamps
Merit Goods -
- cause positive externalities
- underproduced and underconsumed in the free market
- e.g: education, healthcare
Demerit Goods -
- cause negative externalities
- overproduced and overconsumed in a free market
- e.g: cigarettes, alcohol
Free Goods -
- unlimited
- e.g: sunlight, air
Normal Goods -
- an increase in income leads to an increase in demand for these goods
- most goods are normal goods
Inferior Goods -
- demand for these goods decreases as income increases
- usually substitutes
TYPES OF MARKET
- Free Market
- Command Economy
- Mixed Economy
PRODUCTION POSSIBILITY FRONTIERS
A PPF shows the maximum output that an economy can produce if the economy is maximising the use of its resources and operating efficiently.
CAUSES OF ECONOMIC GROWTH
- Discovering more raw materials (e.g. discovering oil fields)
- Increase in the size of work force (e.g. immigration)
- Increase in capital stock (e.g. investment in new machines, factories)
- Increase in labour productivity (e.g. due to better technology)
SPECIALISATION & DIVISION OF LABOUR
Specialisation occurs when a country or firm concentrates on producing a particular good or service. Countries will specialise in producing goods where they have a comparative advantage. For example, Japan specialises in producing high-tech electronic…
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