The nature of the economic problem
What is scarcity?
Limited goods and services and limitless wants and needs
How many factors of production do we know?
What is opportunity cost?
When you have to give up something to get something more.
What is PPC?
The first economic model
Which words does "Economy" come from?
Oikos and nomos
Name factors of production and its rewards.
1. Land - rent
2. Labor - salaries or wages
3. Capital - interest
4. Enterpreneurship - profit
You have a choice of these drinks: water, tea, coffee, coke. Put them in order of pregference. The explain what is opportunity cost.
Second alternative
What is on axes x and y? Give examples
Goods or services
Laws according to Adam Smith
1. Law of demand and supply
2. Law of self-interest
3. Law of competition
Name all types of mobility
1. Within firm, between firms in the same industry, between industries, between countries
2. Occupational, geographic
How is it called when you can do something with the lowest opportunity cost?
Comparative advantage.
What do points on PPC show? What does movement along PPC show?
Efficiency and oportunity cost
4 basic ideas of Adam Smith
1. Wealth of nations depends on the best combination of factors of production
2. Economy works best without regulations
3. Self-interest lead companies to produce only wanted goods at lowest cost
4.The division of labor and the use of machinery
What are advantages brought by mobility of factors of production
1. Higher output
2. The best possible use of FoP
3. Technology impact
4. Changing the types of goods and services according to the demand
Peter bakes 4 breads and 24 cakes. Maroš bakes 5 breads and 25 cakes. Who has opportunity cost in what?
Peter 24/4 = 6
Maroš 25/5 = 5
Maroš bread. Peter cakes.Points under PPC and above PPC?
Under - inefficient, above - not achievable
Name and explain 4 main categories of different products.
1. Consumer durables - last a long time
2. Non-durable goods - used quickly
3. Consumer services - doctors, bankers...
4. Capital goods - used to produce other goods and services
Propose how quantity and quality of FoP can be increased - at least 1 examples for each
Land - higher rent, new discoveries/fertilisers, new technologies
Labour - higher wage, improvement in healthcare/ traing and education
Capital - more capital goods produced, higher interest payments/advanced technology
Enterprise - higher prices, more start-ups/better training, better business advice
Alex decides to spend the weekend working at a part-time job earning $200 instead of going on a camping trip with friends that would have cost $150. What is Alex’s opportunity cost of working instead of going camping?
The enjoyment and experience missed from the camping trip
Give 2 examples when PPC moves upwards and 2 examples when it moves downwards.
Upwards - more FoP
Downwards - less FoP