ECONOMICS
2024
Mrs Van De
Berg
AS
, Basic Economic Ideas a Resource Allocation
The Fundamental Economic Problem
Resources- used for Scarce relative unlimited wants
inputs
>
resources to .
production (cell) This
scarcity
that
producers and
governments
need to makechoices (that leads to
opportunity costs)
·
means consumers , ,
Wants : non-necessities ,
but also factors of Production Available Resources .
that
needs arent
always met hand (income
·
Labour
(wage/salary organised by firm (the entrepreneur
Scarcity: wants t needs s resources
·
Capital (rate of return)
·
Entrepreneurship (profit)
Choices : scarce resources
require
each
of these factors earns a reward
consumers ,
firms governments
,
to choose INPUT
· Capital sumaut ·
Land Organisation
Ceteris
paribus : "all other
things Labour Enterprise*
Risk
remaining equal
,
D
The
Production Consumption
Smallchange
inon the
margin
:
Choice and
Opportunity Costs
Time :
long run - able to
change some
.
The cost
expressed in terms of the best alternative that is
forgone
k not all) factor inputs E
.
g
: Jill decides to take the bus to work instead
of driving
.
It takes her GO minutes to
get
there on the bus and
driving
short run - none
production factors would have taken her 40 minutes.
are variable
Opportunity cost = 20 minutes
very long
runs when all
key inputs
are variable Basic Economic Question
·
WHAT to
produce ?
Unlimited Wants : Wants are .
HOW toproduce ? it
but it ?
unecessary ,
may
·
FOR WHOM
produce
to
improveyour standard These choices are made
by governments and firms . Individuals choices are what to
purchase .
of life.
Production and Consumption
process of creating goods through combining
·
Production c services in resources
economy
- an , .
·
Consumption -
process of satisfyingused consumers wants a needs
(durables
Consumption goods may be up quickly, they may be used for long period of
or a time
Positive and Normative Statements
.
Positive statements : statements that
refer to what will
happen ,
based on actual events or observation.
Opinion not
given
E
.
:
g
A
full supply of petrol
in leads to an increase in its
price
.
,Specialisation . economies
·
Normative Statements: An
opinion is expressed
I a valued
judgement is made, .. the statement can no
longer
be
Gs/Ss observations)
concentrate on
producing proven (facts a .
that
they have
others in
an
advantage over E
.
g
.
A
full supply of petrol should lead
in to an increase in its
price
.
Specialisation and Exdrange
Division
of labour manufacturing
: ·
Refers situation where individuals and firms concentrate producing goods and services rather than others
to a on some .
process is
split into individual Specialisation allows individuals to concentrate what they best at doing on are
However with
specialization it becomes necessary exchange goods Exchange
tasks .
, ,
services more their to or .
surpluses for the surpluses of others .
Positive statement based : on
fact
or actual evidence. Division
of Labour
·
Large
numbers
of workers within
very large production
allows the
process of production
to be broken
Normative statements based on down into a series
oftasks .
often creates dissatisfaction amoung the
the economists
opinion or value Althoughbecome
division of labour
output increases ,
it work
force ,
de skilled and bored with the their work
judgement , cannot be
proven
as
they repetitive nature
of .
Economic Sectors the in which Economic Structure
way
:
materials
an
economy's
sectors are
organised
.
Primary sector I
extracting
raw
·
Secondary manufactures products
sector -
Economic
systems
: the
way
in which ·
Tertiary produce services
sector ->
and doices
production is organised Economic development is
reflected in changing economic structures .
made in an economy
.
are
Economic
Systems
Market economies choices that are made and how
most decisions The
they made is determined
by the economic system of particular country
·
: are a .
A
are taken
through the market countrys economic
system identifies the mean
by which households firms , ,
and the
government make
mechanism. decisions.
Market mechanism. Market
resource ① The
Economy
allocation decisions are taken
by
·
Resources are allocated
by the forces of demand and supply through the price mechanism .
Government direct involvement in the allocation
process of
individual has little
producers and consumers to no resource
· .
with no
government intervention
.
·
Households and
firms interact as
buyers and sellers .
The medianism Government should have direct
price
·
no
Planned should
economy : resources are role I not interfere
. The
owned and allocated
Excess
supply fro firms Increase in
supply
state
by a
&
governments
role is to watch what is
autral
body .
Fall in price happening and should only intervene
More
firms willing supply to
when the
price
mechanism does not
Mixed economy both market and
provide the best allocation of
a
government forces
:
are involved in
timsless wil ing to
supply , Increase in
price resources.
resource allocation decisions.
, ② The Planned
·
Economy
Government has a central role
·
Preferences of consumers and
manufacturing org planned economy controlled centrally
anisations in a are
·
Production
targets are
for the sectors of the economy leg agriculture manufacturing)
set main a
·
Unemployment isn't a
problem everyone allocated job through central planning
as is a
Planning for long-termgrowth through and an
productive potential
increase in
·
.
Pricecontrol
of essential the determination
of wag controlled es are
-
·
most items
the hands
·
Ownership of most
productive resources and
properties is in
of the state
Basic
goods highly subsidised
by the government keep prices
to at a low
fixed level
· .
,
③ Mixed
Economy
·
Combination
of planned and market
economy
·
Division into
public and private sectors,
partake
both in resource allocation
Interaction between the
government firms
and labour
through the market mechanism
·
, ,
Governments role is to
regulate the business market, but
provide ownership opportunities
·
.
2024
Mrs Van De
Berg
AS
, Basic Economic Ideas a Resource Allocation
The Fundamental Economic Problem
Resources- used for Scarce relative unlimited wants
inputs
>
resources to .
production (cell) This
scarcity
that
producers and
governments
need to makechoices (that leads to
opportunity costs)
·
means consumers , ,
Wants : non-necessities ,
but also factors of Production Available Resources .
that
needs arent
always met hand (income
·
Labour
(wage/salary organised by firm (the entrepreneur
Scarcity: wants t needs s resources
·
Capital (rate of return)
·
Entrepreneurship (profit)
Choices : scarce resources
require
each
of these factors earns a reward
consumers ,
firms governments
,
to choose INPUT
· Capital sumaut ·
Land Organisation
Ceteris
paribus : "all other
things Labour Enterprise*
Risk
remaining equal
,
D
The
Production Consumption
Smallchange
inon the
margin
:
Choice and
Opportunity Costs
Time :
long run - able to
change some
.
The cost
expressed in terms of the best alternative that is
forgone
k not all) factor inputs E
.
g
: Jill decides to take the bus to work instead
of driving
.
It takes her GO minutes to
get
there on the bus and
driving
short run - none
production factors would have taken her 40 minutes.
are variable
Opportunity cost = 20 minutes
very long
runs when all
key inputs
are variable Basic Economic Question
·
WHAT to
produce ?
Unlimited Wants : Wants are .
HOW toproduce ? it
but it ?
unecessary ,
may
·
FOR WHOM
produce
to
improveyour standard These choices are made
by governments and firms . Individuals choices are what to
purchase .
of life.
Production and Consumption
process of creating goods through combining
·
Production c services in resources
economy
- an , .
·
Consumption -
process of satisfyingused consumers wants a needs
(durables
Consumption goods may be up quickly, they may be used for long period of
or a time
Positive and Normative Statements
.
Positive statements : statements that
refer to what will
happen ,
based on actual events or observation.
Opinion not
given
E
.
:
g
A
full supply of petrol
in leads to an increase in its
price
.
,Specialisation . economies
·
Normative Statements: An
opinion is expressed
I a valued
judgement is made, .. the statement can no
longer
be
Gs/Ss observations)
concentrate on
producing proven (facts a .
that
they have
others in
an
advantage over E
.
g
.
A
full supply of petrol should lead
in to an increase in its
price
.
Specialisation and Exdrange
Division
of labour manufacturing
: ·
Refers situation where individuals and firms concentrate producing goods and services rather than others
to a on some .
process is
split into individual Specialisation allows individuals to concentrate what they best at doing on are
However with
specialization it becomes necessary exchange goods Exchange
tasks .
, ,
services more their to or .
surpluses for the surpluses of others .
Positive statement based : on
fact
or actual evidence. Division
of Labour
·
Large
numbers
of workers within
very large production
allows the
process of production
to be broken
Normative statements based on down into a series
oftasks .
often creates dissatisfaction amoung the
the economists
opinion or value Althoughbecome
division of labour
output increases ,
it work
force ,
de skilled and bored with the their work
judgement , cannot be
proven
as
they repetitive nature
of .
Economic Sectors the in which Economic Structure
way
:
materials
an
economy's
sectors are
organised
.
Primary sector I
extracting
raw
·
Secondary manufactures products
sector -
Economic
systems
: the
way
in which ·
Tertiary produce services
sector ->
and doices
production is organised Economic development is
reflected in changing economic structures .
made in an economy
.
are
Economic
Systems
Market economies choices that are made and how
most decisions The
they made is determined
by the economic system of particular country
·
: are a .
A
are taken
through the market countrys economic
system identifies the mean
by which households firms , ,
and the
government make
mechanism. decisions.
Market mechanism. Market
resource ① The
Economy
allocation decisions are taken
by
·
Resources are allocated
by the forces of demand and supply through the price mechanism .
Government direct involvement in the allocation
process of
individual has little
producers and consumers to no resource
· .
with no
government intervention
.
·
Households and
firms interact as
buyers and sellers .
The medianism Government should have direct
price
·
no
Planned should
economy : resources are role I not interfere
. The
owned and allocated
Excess
supply fro firms Increase in
supply
state
by a
&
governments
role is to watch what is
autral
body .
Fall in price happening and should only intervene
More
firms willing supply to
when the
price
mechanism does not
Mixed economy both market and
provide the best allocation of
a
government forces
:
are involved in
timsless wil ing to
supply , Increase in
price resources.
resource allocation decisions.
, ② The Planned
·
Economy
Government has a central role
·
Preferences of consumers and
manufacturing org planned economy controlled centrally
anisations in a are
·
Production
targets are
for the sectors of the economy leg agriculture manufacturing)
set main a
·
Unemployment isn't a
problem everyone allocated job through central planning
as is a
Planning for long-termgrowth through and an
productive potential
increase in
·
.
Pricecontrol
of essential the determination
of wag controlled es are
-
·
most items
the hands
·
Ownership of most
productive resources and
properties is in
of the state
Basic
goods highly subsidised
by the government keep prices
to at a low
fixed level
· .
,
③ Mixed
Economy
·
Combination
of planned and market
economy
·
Division into
public and private sectors,
partake
both in resource allocation
Interaction between the
government firms
and labour
through the market mechanism
·
, ,
Governments role is to
regulate the business market, but
provide ownership opportunities
·
.
