Introduction to Economics

The Economic Problem

Opportunity Cost
Comparison......
16 million
Kazakhstan

63 million UK



The Economic Problem

Scarce
Resources

Unlimited Wants

FREE GOODS
Unlimited
goods, for
which no
sacrifice has to
be made to
acquire them.


Economic Goods
Any good (or
service)
produced from
scarce
resources.



Opportunity Cost
The cost
of the
nearest
alternative
foregone.
Factors of Production
Resources available for use in production
process
LAND = NATURAL RESOURCES, LAND AND RAW
MATERIALS-on, under, in athmosphere
Non-renewable(eg.oil) and Renewable(eg.fish)


Human Resources (Labor) Is the workforce of
an economy- physical and mental talent
These are the skills people have that are used to
produce goods and services.

Value of LABOUR is called= HUMAN CAPITAL
Education and Trainning value of HC productivity

Capital-the manufactured stock that are used in the production of other
goods, eg stock of raw materials, offices,machines,offices,etc.
CAPITAL TYPES A)Working Capital-eg. Raw materials,semi and final goods
B)Fixed Capital- factories,offices,plant, machinery



Entrepreneur
Individual who:
Organise
land,labour and
capital in production
Takes risks-invest
own money and
resources in hope to
make profit.


Input
factors of
production
LAND


LABOUR


CAPITAL


ENTERPRISE
FIRM
Output
goods &
services
The Nature of Production
Specialisation
Focus on Production of limited range
by individuals, firm or country is cooperation with
others so that complete range of goods is produces
Scarcity limits quantity, quality and
variety of goods and services
Specialisation by individuals is called
Division of labour-refer to Adam Smith
Specialisation by nations,eg. Kazakh oil
and uranium, German cars, eg
Activity 15 mins

In groups of 3 4 identify
the factors of production
that apply to Kazakhstan....
What is plentiful...

What is scarce? What is
needed for the economy to
grow.

Elect a spokesperson and
report back to the rest of the
group.


Factors of Production in Kazakhstan
LAND what resources? What is grown? What is
mined? Where are the resources? Can they be
transported?
LABOUR large/small population...educated? Skilled?
Old or young? Migration..... Are other nationalities
coming to Kazakhstan to work? Are Kazakh people
leaving?
CAPITAL what is your industry? Does it need
machinery? What capital machinery is used in
Kazakhstan? Is it made here or imported?
ENTERPRISE are there well known Kazakh business
people? How easy is it to start a business in
Kazakhstan? What Kazakh businesses are there?
What businesses from other countries?

Homework
Pick one element of one of the factors of
production and carry out research on the
computer, and write a two paragraph report.

E.g. Population.... Size, migration, education
levels, gender, age structure
Or
Oil industry in Kazakhstan.
The Economic Problem
What goods and services should an
economy produce?


How should goods and services be
produced?


Who should get the goods and
services produced?