Podcast
Questions and Answers
Which of the following best defines scarcity?
Which of the following best defines scarcity?
What is meant by opportunity cost?
What is meant by opportunity cost?
Which factor of production includes human resources?
Which factor of production includes human resources?
What is a primary disadvantage of specialization?
What is a primary disadvantage of specialization?
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Which of the following is an example of division of labour?
Which of the following is an example of division of labour?
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What does the term 'added value' refer to?
What does the term 'added value' refer to?
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Which method can increase added value while keeping the selling price constant?
Which method can increase added value while keeping the selling price constant?
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What is a potential consequence of increasing added value by raising the selling price?
What is a potential consequence of increasing added value by raising the selling price?
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Study Notes
Needs and Wants
- Needs: Essential goods or services for survival (e.g., clean water, food).
- Wants: Non-essential goods or services (e.g., phones, TV, books).
Economic Problem
- Economic Problem: Unlimited wants but limited resources, leading to scarcity.
- Scarcity: Insufficient resources to meet all wants.
Opportunity Cost
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Opportunity Cost: The value of the next best alternative given up in a decision.
- Example: Choosing ice cream over candy.
Factors of Production
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Factors of Production: Resources used to produce goods and services.
- Land: Natural resources (e.g., plot of land).
- Labour: Human resources.
- Capital: Man-made resources (e.g., machinery).
- Enterprise: Organization and risk-taking.
Business
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Business: An organization that combines factors of production to create goods and services.
- Examples: Cathay Pacific, McDonald's, Nike.
Specialization
- Specialization: Focusing on a specific skill, good, or service.
- Pros: High quality, efficiency, experienced workers, increased sales.
- Cons: Over-reliance on one product (declining sales), boredom and carelessness, difficulties replacing sick workers.
Division of Labour
- Division of Labour: Breaking down production into separate tasks with specialized workers.
- Pros: Reduced wasted time, increased worker experience, more economy.
- Cons: Boredom, inefficiencies due to absent worker replacements.
Added Value
- Added Value: Difference between selling price and cost of materials.
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Method 1 (Increasing Selling Price):
- Example: Price increase from $10 to $12, but material cost remains $5.
- Consequence: Customers may not pay more.
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Method 2 (Reducing Cost):
- Example: Price remains $10, material cost decreases from $5 to $3.
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Description
Test your knowledge on the fundamentals of economics, including needs and wants, the economic problem, opportunity cost, and factors of production. This quiz covers essential concepts that shape our understanding of how resources are allocated in society.
