The Economic Problem

Key terms: Definition: Opportunity cost The cost of missing out on the next best alternative. Economic goods Goods that are scarce and therefore have an opportunity cost. Free goods Goods that have no opportunity cost, e. G. Air Factor market The market for the factors of production that make other goods and services such as labor or raw materials. Free market economy One in which there is very limited government involvement in providing goods and services. Division of labor Dividing one task into many little ones. Value Judgments Opinions or statements which depend on the views of the individual
Normative statements Opinions that cannot be proven or tested. Positive statements Statements that can be tested against real world data. Factors of Production: 1 . Land [Resources] 2. Labor [Workers 3. Capital [Money or Machinery] 4. Enterprise [Entrepreneurs] Economic Objectives: Government/ State [Want to give out grants to new businesses as they will create more Jobs and pay a substantial amount of tax which will go into the economy] Consumers [They want good quality and the product/service to be at a good price The Economic Problem By Nicole_Streaky deter working conditions, and Job security.
Also some workers will accept a lower pay if other benefits emerge, egg. Healthcare. Firms/ Business [Their main objective is to maximize profits. Also to spend less on raw materials] Prices & Profits have three key functions: 1. Incentive function 2. Rationing function 3. Signaling function When prices rise consumers tend to ration (cut down) their demand. When prices fall consumers extend their demand (an end to rationing). The Production Possibility Boundary (BP) The key problem in economics is that we have to make choices, because there are not enough resources to provide everything we want.

The shortage is known as scarcity. However, if we chose to use the resources to produce one good or service, we cannot use them to produce something else. Giving up the ‘something else’ is called the opportunity cost. If there is no opportunity cost in producing something, it is known as a free good. The resources we can use are divided into four types; land, labor, capital and enterprise. Collectively, they are know as factors of production and the key mechanism in market economics in deciding where they are used is the price mechanism.

Don't use plagiarized sources. Get Your Custom Essay on
The Economic Problem
Just from $13/Page
Order Essay
Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 15% with the discount code BANANA