1. Economic agents and resources
Who and what is involved in the economy?

2. What is used to satisfy needs and wants?
Businesses combine the four factors of production namely: L _ _ _ _ L_ _ _ _ _ C_ _ _ _ _ _ E_ _ _ _ _ _ _ _ _

3. Land
Any natural resource that can be used or extracted from the earth eg … Some land has a market price eg crude oil others have a reward paid to their owner eg rent on a field Renewable resources Non renewable resources IQ -Name three challenges to land resources

4. Labour
Workforce resources that are used in production of goods and services eg…
Ideally labour as a factor is mobile:
Geographically when…
Occupationally when…
What might create immobility of labour?
IQ – what might be done to reduce this barrier?

5. Capital
Any human made resource used in the production of goods and services eg…
Additional forms of capital are
Infrastructure – roads, power and communication links, airports
Finance – the financial resource that allows for other resources to be purchased
Intellectual capital – inventions and new ideas that can be owned by companies or individuals
There are 2 types of goods made:
Capital goods – made for firms, likely to improve living standards in the future. Measured by investment in fixed capital formation these goods depreciate over time –called fixed capital consumption
Consumer goods – made for consumers contribute to living standards now
IQ – which of the above is preferable from a long term economic perspective?

6. Enterprise
The risk taker who combines all the other factors in order to produce goods and services. The reward to this factor is….
The entrepreneurial function involves raising finance to establish and run the new venture.
For sole traders and partnerships the owners are the entrepreneurs
For Plc companies the investors are not the same as the managers and directors who run the business
IQ – why is this less well developed in the UK compared to other countries?

7. Which factor? A forest of long fibre spruce
A woman who starts her own marketing business
Mineral deposits
Livestock
Planed timber
Gutted fish
Electrician
Partnership of electricians

8. Alternative uses
Land can be used for… Labour has transferable skills like… Capital can be used for a variety of business uses eg… Entrepreneurs can adapt to different businesses eg… Opportunity cost – the loss of benefit from option 2 when option 1 is chosen eg If the NHS decide to buy 4 MRI scanners we lose the benefit of If a chocolate business invests in a new sales office then… The government sends aid money to deal with humanitarian crisis.. If a worker starts their own business then… Because wants are unlimited but resources are scarce choice involves sacrifice – a fundamental concept in economics!

9. Economic Agents are assumed to be rational and maximising
Key aims
Tools and actions
Consumers /Households
Firms/Businesses
Government

10. Economic Agents are assumed to be rational and maximising
Key aims
Tools and actions
Consumers /Households
Fulfil needs and wants eg food clothing shelter/ holidays phones and entertainment
Utility maximisation – the highest level of satisfaction from a given set of resources
Working
Spending
Firms/Businesses
To survive, grow, make profit, provide products and services for revenue
Long run profit maximisation
Make
Sell
Hire
Spend
Invest
Government
Maximise social welfare – encourage people into work, control macro economic price level, oversee lending market, correct market failure
Tax
Regulate
Set legal framework

11. Who should benefit from production?
Owners or workers? Consumers or Government? People or the environment?