the cost of the next best use of time and money when choosing to do one thing or another
Production Possibility Frontiers (PPF)
The graph shows the different rates of production of two goods and/or services that an economy can produce efficiently during a specified period of time with a limited quantity of productive resources, or factors of production. The PPF shows the maximum amount of one commodity that can be obtained for any specified production level of the other commodity given the society's technology and the amount of factors of production available.
Extension of Frontier
Increase in spare capacity
Contraction of Frontier
Decrease in spare capacity
An economic term that refers to the buyers and sellers who negotiates prices of goods or services depending on demand and supply.
Monopolies- The exclusive possession or control of the supply or trade in a commodity or service
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
For example, aging people; working population; baby boom)
Price sensitive. Consumers buy more or less of a product when the price changes
YED/ Income elasticity Demand
Measures the responsiveness of demand to a change in income.
Market Price/ The point where demand and supply meet that sets the price
When demand is greater than supply
When supply is greater than demand
Extra capacity, workers and machines
In economics, a public good is a good that is non-rival and non-excludable
Government organization that provide goods and services in the economy
The provision of goods and service by businesses that are owned by individuals or group of individuals
Relies entirely on the public sector to choose, produce and distribute goods. All resources in planned economies belong to the government and the state is responsible for planning, organizing and coordinating the whole production process.
Relies least on the public sector for the provision of goods and services. The cast majority are provided by private businesses. The allocation of resources is determined by market forces system, a monetary system, key state services like defense and policing and ensuring that competition exists between businesses.
Where markets lead to inefficiency
Minimizing costs and the use of resources
People available for work in a country
Division of labour
The breaking down of the production process into small parts with each worker allocated to a specific task.
The production of a limited range of goods by individuals, firms, regions or countries
The demand for labour is derived from the demand for the goods and services supplied by firms and public sector organizations.
The amount of money paid to workers for their services over a period of time
Minimum wage legislation
A legislation that allows all workers in that country to have minimum salary that provides a suitable living condition for them
Organizations that exist to protect the interest of workers. In most countries there are numerous different trade unions that cater for different types of workers.
A minimum amount per hour which most workers are entitled to be paid.
Production Possibility Curves (PPCs)
A line which shows the different combinations of two goods an economy can produce if all resources are used up.
Costs that do not vary with out put (e.g rent)
Vary directly with output (e.g. raw materials)
All the costs of producing a good or services added together. (TC= FC +VC)
Total costs divided by the output (This has a diagram) (
The amount of money a firm receives from selling its output (TR= Price x Quantity)
Average amount of money a firm receives from selling one unit of output (AR = TR/output)
The difference between total revenue and total costs (Profit = TR- TC)