1. ADDED VALUE
1.1. Added value = Selling price - cost of materials
1.2. Importance
1.2.1. 1. To pay other costs
1.2.2. 2. To make profit
1.3. Adding value
1.3.1. 1. Increase price BUT same material costs
1.3.2. 2. Same price BUT reduce material costs
2. Goods(products)/Services
2.1. Consumer G/S
2.1.1. Single use
2.1.2. Durable use
2.2. Producer G/S
2.2.1. Single use
2.2.2. Durable use
3. Wants of people (unlimited)
4. ECONOMIC PROBLEM (Scarcity)
4.1. Unlimited wants + Limited resources
4.1.1. Not enough resources to produce all the G/S to satisfy all unlimited wants.
4.2. CAUSE: lack of factors of production - resources needed to produce G/S
4.2.1. 1. LAND- all natural resources provided by nature
4.2.2. 2. LABOR- all mental and physical human effort
4.2.3. 3. CAPITAL- finance, machinery, and equipment needed for the manufacture of other G/S.
4.2.4. 4. ENTERPRISE- consists of entrepreneurs (who are organised, take risks, make decisions)
4.3. Leads to:
4.3.1. 1. Specialization 2. Division of labor (1 and 2 are same)
4.3.1.1. 1.- occurs when people and bussinesses concentrate on what they are best at
4.3.1.2. 2.-when the production process is split up into diff. tasks and each worker performs one of these tasks.
4.3.1.3. leads to efficient use of resoueces
4.3.2. Opportunity cost
4.3.2.1. to give up the next best alternative by choosing another item