As Unit F581: Markets in Action
The reasons for individuals, organisations and societies having to make choices
· Describe what economists mean by the economic problem.
Definition: The economic problem is when consumers have infinite wants when only scarce resources are available.
Simply, this means that the consumer wants to do all of several options, but a lack of money and time means that they have scarce resources, so cannot do so.
· Understand the different factors of production as economic resources.
The factors of production are as follows:
Land; Labour; Capital; Enterprise
When it comes to explaining these, it is easier to give an example in terms of an exam question.
E.G. State and explain two factors of production for building a motorway.
Land could be one factor of production as an area of space is needed to construct the motorway on. Enterprise is a factor as there is always a need for an entrepreneur to think and put into action the idea of building a motorway. Labour is needed in the form of workers to build the motorway itself, and Capital is the funding given to the construction of the motorway.
· Explain how specialisation can be used to address the problem of scarcity.
Specialism is an area of something a person had focussed their time and become particularly able in, when compared to another area.
Scarcity is where there is an insufficient amount of a good or service due to consumer, producer or government demand for it.
When using specialism in Industry, it means that the workforce are working in areas that they are best suited, and it means that they can carry out more of this action in a time period than someone who has not received training in that area. This…