Economics A-level

Economics Alevel Theme 1 notesEconomics is a social science not anaturalscience such as Biology Chemistry and Physics -it studies human interaction and the study of societycetens Paribus is latin for "all other factors are held constant" which means economistscan only focus on one factor instead of manyPositive statement is are objective and fact based and can be tested using evidence toprove true or falseNorma tive statements are subjective based on value judgements and cannot betested using evidence. value guagements are opinionsThe basic economic problem is also known asthe problem of scarcity which meansthat humans have unlimited wants but there are scarce resources 30 they can't besatisfiedOpportunity cost means the benefit given up of the next best alternative - thisWhen we decide on now to allocate these scarce resources there are three questionsmeans that to do one thing you are giving up something elsethat must be answered 1) What to allocate these resources on ? 2) How to allocateresources? 3) And for whomThere 2) are four factors of production: land. natural resources such as oil, gas4) 3) Capital - man made resources which aid in the production of goods and servicesla bour - Physical and mental work by workers whoare paid wages3 Enterprise - Anentrepreneal is someone who takes a risk in combining theaprofit other factors of production tomake goods and services in order to makeat Renewable resources natural resource thatcan be replaced at the same rateNon which it IS being consumed eg. Sunlight and windbeing consumed eg. oil coal and naturalgasRenewable resources cannot be replaced at the same rate at whichitProduction Possibility Frontiers: A graph that shows the maximum possibleoutput resources combinations of two goods or services when an economy utilizes allcapital goodsAB - all resources7This is called economichave beenADgrowth 4 there may have*utilized productivelybeen anew discovery ofefficientresources or increaseBCd - unattainable meaningindrodu clivity educationnotenough resourcesand trainingconsumerC - productively ineffientgoodsmeaning all resourcesThisis called economic declinehave not been utilizedbecause of naturaldisasters sothere lessCapital goods are goods that produced in order tonatural resourcesaid in the production of consumer goods and consumer goods are goods andservices which directly satisfy human wants directlyDivision of labour is when production's split into smaller tasks soeach workercan workon induvidualtaskThere are advantages such as: reducing average cost, increase in productivityquicker training and less time wasted however the drawbacks are that it isunrewarding repetetive lowers motivation and anincrease in absenteeismFunctions of money: 1) Medium of evenange - money allows goods and servicestobe traded without the need fora barter system 2) store of value - this can reperto any asset whose value can be used now or in the future meaning it's valuecan be retrieved at alater date 3) unit of account - allows the value of somethingto be expressed an understandable way and allows the value of items to becompared 4) Standard of deperred payment - repers to the expressing of thevalue of debt sopeople canstill buy goods and services and then pay backat alaterdatecharacteristics of money: Durable ,Portable, divisible, valueble accepted counterfiethard to