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Economics is defined as the branch of knowledge touch on with the output, consumption, and transfer of wealth. THE ECONOMIC PROBLEM: How to satisfy un restrict desires with limited resources. CAPITAL| INTEREST| LABOUR| WAGE/SALARY| grossness| RENT| ENTERPRISES| PROFIT| OPERATION OF AN ECONOMY Land, force, capital and initiative be altogether in limited supply. This reflects the scotch enigma of scarcity. * mart economies allocate scare resources according to how consumers intend to authorize their income. * Businesses act to this consumer demand obtaining the necessary resources to piss these items. * Businesses must root which crew of resources to use to invoke goods. These resource combinations are all labour intensive or capital intensive. OPPORTUNITY bell prospect personify is fundamental to every rescue, government, firm and individual. The finale about what to conjure up or buy is make at the expense of new(prenominal ) goods and services that could have been produced or consumed. Opportunity cost represents the secondary use of resources on one want over an pick want. THE KEY ECONOMIC ISSUES 1. What to produce? 2. How such(prenominal) to produce? 3. How to produce? 4. How to distribute production?

PRODUCTION gap FRONTIER (PPF) The production possibility frontier can be used to argue how opportunity costs arise when individuals or the community perplex choices. The PPF is a graphical representation of all the possible combinations of the production of two goods or services that the economy can pro duce at any given time. THE notice FLOW ! OF INCOME The billhook flow of income is a model that describes how economic activity occurs amongst the different groups in an economy. * Individuals: consists of individuals and households who provide resources for production and who grease ones palms g+s. * Business: consists of all the firms in the economy busy in production and distribution of...If you want to get a unspoiled essay, order it on our website: OrderCustomPaper.com

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