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what are the two branches of economics
Macroeconomics and Microeconomics
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What is the Economics formula:
Businesses and government generates: production, income, employment Expenditure examples: buying/selling,trading,production
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What are Econimic Basic
Need and Wants
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What is needs
Things that are essential for survival: food, water, clothing shelter etc.
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What is wants
A want: something we would like to have, but we can survive without
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What are the economic Resources
Land, Labour, Capital and Enterprice
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What is land:
Any naturally occurring materials, called raw materials
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Example of land:
Minerals, gold, animal, wheat
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What is Labour?
When a person works, they are using their labour rsources
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what is a capital resource?
Man made resources
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Examples of capital resources
Factories, machines, tool, computer that helps labour increase in production
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What is enterprice?
The skill combining the factors of production also known as entreprenuers
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Example of Enterprice:
Etreprenuers: Bill Gates, Dick Smiths Steve Jobs
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What is scarcity?
Scarcity, the basic economic problem. Knowing what we cant have everything and so we must choose between competing alternative
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The scarcity diagram:
- unlimited wants-->
- limited resources-->economical choices
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What is opportunity cost?
The ability to make choices without scare resources.
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The value of opportunity cost
The value of the second choice. It is the opportunity that you "gave up" in order to have the opinion that considered to be the most desirable.
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Why economic system?
Nations use economic systems to determine how to use their limited resources effectively to provide people minimum standard of living
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Different types of economic systems
- Traditional economy
- Market economy (unplanned)
- Command economy (planned)
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Traditional economy:
Fund in rural, under-developed countries
Pygmies of congo, eskimos and indian tribe, Australian aborigines
- -customs/rituals govern economic decisions
- -no commercial activity
- -resources are used to meet basic needs
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The advantages and disadvantages
Advantage: People have specific roles, life is simple
Disadvantages: Technology not used, new ideas discouraged, standard of living never change.
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what is Command economy (unplanned)
Governments determines what, how and for whom goods and services are produced
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