Opportunity cost
The value of the next best alternative forgone
Production possibility curve
A graph to show the maximum that can be produced from two products and opportunity cost is the slope
Occupational mobility
The ability of factors of production to move from one use to anther
Geographical mobility
The ability of factors of production to move from one area to anther
Scarcity
A situation where there is not enough to satisfy everyone’s wants
The economic problem
Unlimited wants exceed scarce resources
Factors of production
The economic resources of capital, enterprise, labour, and land
Land
Gifts of nature available for production
Labour
All human effort mental and physical involved in producing goods and services
Capital
Human made goods used in production
Enterprise
Risk bearing and decision making in business
Investment
Spending on capital goods
Depreciation
The value of replacing capital
Productivity
Output per worker hour
Economic good
A product which requires resources to produce it and therefore has an opportunity cost
Free good
A product which does not require resources to produce it and therefore has no opportunity cost
A planned economy
An economy where the government makes the crucial decisions, land and capital are state-owned and resources are allocated by directives
A market economy
An economy where consumers determine what is produced, resources are allocated by the price mechanism and land and capital are privately owned
A mix economy
An economy in which both the private and public sectors play an important role