ECON 201 Ateneo De Manila University -
Economics
Economics AS Level Notes
Economics Definition – The study of how to allocate scarce resources in the most effective way
Economic Problem Definition – How to allocate scarce resources among alternative uses
Household Definition – A group of people whose spending decisions are connected
Microeconomics Definition – The study of how households and firms make decisions in markets
Macroeconomics Definition – The study of issues that affect economies as a whole
The Basic Economic Problem
The fact that resources are scarce compared to the unlimited wants → Choices having to be
made
Goods Definition – Tangible products, i.e. products that can be seen and touched, such as cars,
food and washing machines
Services Definition – Intangible Products, i.e. products that cannot be seen or touched, such as
banking, beauty therapy and insurance
Factors of Production
Factors of Production Definition – The resource inputs that are available in an economy for the
production of goods and services
The Four Factors:
Land – This is a natural resource. Things such as oil, coal, rivers and the land itself.
Labour – This is the human resource that is available in any economy / The quantity and quality
of human resources
Some economies (generally poor countries) have large populations but lack a skilled workforce
and for other countries like Germany with declining populations, they depend on immigrant
workers to do both skilled and unskilled jobs. Quality of labour is essential for economic
progress.
Capital - Man-made aids for production / Goods used to make other goods
It is combined with Land and Labour
MERC - Machines, Equipment, Robots and Computers
Entrepreneurship - The willingness of an entrepreneur to take risks and organise production.
Entrepreneur Definition - Someone who bears the risks of businesses and who organises
production.
,Some Extra Definitions
The world’s poorest countries tend to have few or poor Factor Endowments (vice versa).
Factor Endowments Definition - The stock of factors of production
Production Definition -The output of goods and services
Want Definition - Anything you would like, irrespective of whether you have the resources to
purchase it
Scarcity Definition - A situation where there are insufficient resources to meet all wants
Choice Definition - The selection of appropriate alternatives
Opportunity Cost Definition - The cost of the (next) best alternative, which is forgone when a
choice is made / The next best alternative forgone
Specialisation Definition - The concentration by a worker or workers, firm, region or whole
economy on a narrow range of goods and services
Exchange Definition - The process by which goods and services are traded
, International Specialisation
The Advantages of International Specialisation (ORE):
An increase in the output of goods and services - In comparison to what they could
achieve on their own
A widening of the range of goods that are available in an economy
Increased exchange between developed and developing economies
The Disadvantages of International Specialisation (WIFT):
Bad weather – It can wipe out a whole years crops
De-industrialisation – Due to cheap imported goods displacing workers
Finite Resources – If they run out trouble will ensue, unless the income gained from it
has been wisely invested in the future
Tastes or needs of consumers may change – Hardship among those producing goods
that are no longer wanted / needed is inevitable
Productivity Definition – Output, or production of a good or service, per worker per period of
time
Production Possibility Curve
Production Possibility Curve (Firm) – This shows the maximum quantities of different
combinations of output of two products, given current resources and the state of technology
Production Possibility Curve (Country) – This shows the maximum quantities of different
combinations of output of capital and consumer goods, given current resources and the state of
technology
Developed Economy – An economy with a high level income per head
Developing Economy - An economy with a relatively low level of income per head
Economics
Economics AS Level Notes
Economics Definition – The study of how to allocate scarce resources in the most effective way
Economic Problem Definition – How to allocate scarce resources among alternative uses
Household Definition – A group of people whose spending decisions are connected
Microeconomics Definition – The study of how households and firms make decisions in markets
Macroeconomics Definition – The study of issues that affect economies as a whole
The Basic Economic Problem
The fact that resources are scarce compared to the unlimited wants → Choices having to be
made
Goods Definition – Tangible products, i.e. products that can be seen and touched, such as cars,
food and washing machines
Services Definition – Intangible Products, i.e. products that cannot be seen or touched, such as
banking, beauty therapy and insurance
Factors of Production
Factors of Production Definition – The resource inputs that are available in an economy for the
production of goods and services
The Four Factors:
Land – This is a natural resource. Things such as oil, coal, rivers and the land itself.
Labour – This is the human resource that is available in any economy / The quantity and quality
of human resources
Some economies (generally poor countries) have large populations but lack a skilled workforce
and for other countries like Germany with declining populations, they depend on immigrant
workers to do both skilled and unskilled jobs. Quality of labour is essential for economic
progress.
Capital - Man-made aids for production / Goods used to make other goods
It is combined with Land and Labour
MERC - Machines, Equipment, Robots and Computers
Entrepreneurship - The willingness of an entrepreneur to take risks and organise production.
Entrepreneur Definition - Someone who bears the risks of businesses and who organises
production.
,Some Extra Definitions
The world’s poorest countries tend to have few or poor Factor Endowments (vice versa).
Factor Endowments Definition - The stock of factors of production
Production Definition -The output of goods and services
Want Definition - Anything you would like, irrespective of whether you have the resources to
purchase it
Scarcity Definition - A situation where there are insufficient resources to meet all wants
Choice Definition - The selection of appropriate alternatives
Opportunity Cost Definition - The cost of the (next) best alternative, which is forgone when a
choice is made / The next best alternative forgone
Specialisation Definition - The concentration by a worker or workers, firm, region or whole
economy on a narrow range of goods and services
Exchange Definition - The process by which goods and services are traded
, International Specialisation
The Advantages of International Specialisation (ORE):
An increase in the output of goods and services - In comparison to what they could
achieve on their own
A widening of the range of goods that are available in an economy
Increased exchange between developed and developing economies
The Disadvantages of International Specialisation (WIFT):
Bad weather – It can wipe out a whole years crops
De-industrialisation – Due to cheap imported goods displacing workers
Finite Resources – If they run out trouble will ensue, unless the income gained from it
has been wisely invested in the future
Tastes or needs of consumers may change – Hardship among those producing goods
that are no longer wanted / needed is inevitable
Productivity Definition – Output, or production of a good or service, per worker per period of
time
Production Possibility Curve
Production Possibility Curve (Firm) – This shows the maximum quantities of different
combinations of output of two products, given current resources and the state of technology
Production Possibility Curve (Country) – This shows the maximum quantities of different
combinations of output of capital and consumer goods, given current resources and the state of
technology
Developed Economy – An economy with a high level income per head
Developing Economy - An economy with a relatively low level of income per head
