Economics Essay

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wefghergwergw werg wer |Positive and Normative Economics | Positive economics deals with scientific or objective explanations and statements about the economy. For example it is possible for me to state that in the case of normal goods an increase in the price will lead to a decrease in the quantity demanded. Normative economics attempt to describe the economy through value judgements. For example "the rich should be taxed at a far higher rate than the poor" contains value judgement about the role of the government, therefore it is a normative statement. | | Factors of Production There are four factors of production: Capital This refers to all of the tools, buildings, machines et cetera used in the production of goods and the money that firm have and use. Enterprise This is carried out by entrepreneurs who: ▪ Think of ideas. ▪ Organise the other three factors of production. ▪ Take risks with their own money and the financial capital of others. Land Not only the land, but all of the natural resources as well, e.g., gold, oil, fish, wheat. There are two types of land: ▪ Non-renewable resources, e.g., oil, gas and copper. ▪ Renewable resources, e.g., fish, forests and corn. Labour This is the workforce of the economy. All workers possess different qualities. Scarcity There are only a limited amount of resources on the planet. Economists describe these resources as being scarce and call them economic goods. Infinite wants Humans have a minimum level of needs which are necessary for survival, food, shelter, heat and clothing. Despite this people would rather enjoy

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