economics note 1

economics note 1

1. oppurtunity cost

2. scarcity

3. production possibility frontier

   • principle of diminishing return
   • shift
     • imporvement in productivity and efficiency
     • increase size of workforce/ rise in amount of capital equipment

4. free market economy

   • ownership:owned privately
   • objectives
     • customer:maximise welfare
     • firms:maximise profit
     • individual who owns factors of production
       • maximise wagem rents, interest and profit
   • what will be produced
     • cosnumer sovereignty:whatever the consumer wants
   • how will it be produced
     • efficiently
     • labour intensive
     • capital intensive
   • for whom will it be produced
     • the rich

5. specialisation

6. money

   • medium of exchange
   • store of value
   • unit of account
   • standard of deferred paymen
   • characteristics of money
     • acceptable to all
     • portable
     • duraable
     • divisble
     • limited
     • difficult to forge