Basic Economic Problem

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Basic Economic Problem
Basic Economic Problem

• At the end of the lecture you should be able to

- to identify the factors of production - to
identify positive and normative
economics
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Basic Economic Problem
Basic Economic Problem - FOPs

• What are resources?
• - inputs or factors of production
• - Land
• - Labour
• - Capital
• - Enterprise

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Basic Economic Problem - FOPs
Basic Economic Problem - FOPs
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Basic Economic Problem - FOPs
Basic Economic Problem - FOPs
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Basic Economic Problem
Basic Economic Problem - FOPs
Basic Economic Problem

• Land
• includes all natural resources or endowments on
  earth
• renewable resources that which can be used and
  replaced eg fish stocks, water, forests
• non-renewable resources that which once used
  can never be replaced eg oil, gold

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Basic Economic Problem - FOPs

• Labour
• Includes all mental and physical workforce of an
  economy
• E.g. services of an accountant, teacher, or
  labourer

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Basic Economic Ideas
Basic Economic Problem - FOPs

• Capital
• Man made resources used to produce GS
• fixed capital
• - is the stock of factories, offices, plant and
  machinery
• - is fixed and will not be turned into a final
  product.
• working or circulating capital
• - is stocks of raw materials, semi-manufactured
  and
• finished goods waiting to be sold.

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Basic Economic Problem - FOPs
Basic Economic Problem - FOPs
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Basic Economic Problem - FOPs

• Entrepreneurship
• the factor which organises all the other 3
  factors into the production process for a
  profit.
• performs 2 functions
• - organises the production process
• - takes the risk of a profit or a loss

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Basic Economic Problem - FOPs
Basic Economic Problem - FOPs
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Basic Economic Problem - FOPs
Basic Economic Problem - FOPs
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Basic Economic Ideas
Basic Economic Ideas

• Positive Normative Statements

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Basic Economic Ideas
Basic Economic Ideas
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Basic Economic Ideas
Basic Economic Ideas