Category: Uncategorized

1.3.1 Enterprise and entrepreneurship:

• Characteristics of successful entrepreneurs
• Contents of a business plan and how business plans assist entrepreneurs
• Why and how governments support business start-ups, e.g. grants, training schemes

An enterprise is an activity or a project that produces services or products. Within enterprise we have entrepreneurs.

Entrepreneurship

An entrepreneur is a person who organises, operates and takes risks for a new business venture. The entrepreneur brings together the various factors of production to produce goods or services. Here are traits that make up an entrepreneur; Hard working, Innovative, Self-confident, Risk taker, Creative, Independent

Business plan

A written document containing the business aims and objectives; important details about the operations, finance and owners of the that business. How, when and what they will do. A look into future of the business, the steps it will take to get where they need to be.

A typical business plan includes several key components:

Executive Summary: This is a concise overview of the entire plan, summarizing the business concept, goals, target market, and financial projections.

Business Description: Detailed information about the business concept, the problem it solves, products or services offered, target market, and unique selling propositions (USPs).

Market Analysis: Research and analysis of the industry, target market, competitors, and market trends. This section helps to demonstrate an understanding of the market and how the business fits into it.

Organization and Management: Details about the organizational structure, management team, and key personnel involved in the business, including their roles and responsibilities.

Products or Services: Comprehensive information about what the business offers, including features, benefits, and how they fulfill customer needs.

Marketing and Sales Strategy: Plans for reaching and acquiring customers, including marketing channels, sales strategies, pricing, and promotional activities.

Funding Request (if applicable): If seeking funding, this section outlines the funding requirements, how the funds will be used, and the potential return on investment for investors.

Financial Projections: Forecasts of the financial performance of the business, including income statements, cash flow projections, and balance sheets for the next few years.

Additional documents or information that supports the content of the business plan, such as resumes of key team members, detailed market research, or legal documents.

Business plans can vary in length and detail depending on the purpose, audience, and stage of the business. They are essential tools for entrepreneurs to articulate their vision, strategy, and operational plans to potential investors, partners, and team members.

Governments aid start-ups to help economic growth, job creation, and innovation. They provide financial assistance like grants, loans, and subsidies targeting specific industries or regions that are struggling.

The government may also offer Training, mentorship programs, and incubators offer essential skills, resources, and networking opportunities. Tax incentives and simplified regulations ease the start- up process.

Access to research facilities, technology hubs, and market connections further supports their growth. Overall, government support nurtures an environment conducive to entrepreneurial success, fostering innovation, job opportunities, and economic advancement.

I have prepared a lesson, watch as you will find it very useful. This video covers the who lesson!

1.3.2 The methods and problems of measuring business size:

• Methods of measuring business size, e.g. number of people employed, value of output, capital employed (profit is not a method of measuring business size)
• Limitations of methods of measuring business size

Businesses come in many sizes. They can be owned by a single individual or have up to 50 shareholders. They can employ thousands of workers or have a mere handful. But how can we classify a business as big or small?

Business size can be measured in the following ways:

Number of employees: larger firms have larger workforce employed
Value of output: larger firms are likely to produce more than smaller ones
Value of capital employed: larger businesses are likely to employ much more capital than smaller ones

However, these methods have their limitations and are not always accurate.

Example:

When using the ‘number of employees’ method to compare business size is not accurate as a capital intensive firm ( one that employs a large amount of capital equipment) can produce large output by employing very little labour (workers). Similarly, value of capital employed is not a reliable measure when comparing a capital-intensive firm with a labour-intensive firm. Output value is also unreliable because some different types of products are valued differently, and the size of the firm doesn’t depend on this.

1.3.3 Why some businesses grow and others remain small:

• Why the owners of a business may want to expand the business
• Different ways in which businesses can grow, e.g. internal/external
• Problems linked to business growth and how these might be overcome
• Why some businesses remain small

Businesses want to grow because growth helps reduce their average costs in the long-run, help develop increased market share, and helps them produce and sell to them to new markets.

There are two ways in which a business can grow- internally and externally.

internal – This occurs when a business expands its existing operations. For example, when a fast food chain opens a new branch in another country. This is a slow means of growth but easier to manage than external growth.

External growth – This is when a business takes over or merges with another business. It is sometimes called integration as one firm is ‘integrated’ into the other.

Merger – is when the owner of two businesses agree to join their firms together to make one business.

Takeover – is when one business buys out the owners of another business , which then becomes a part of the ‘predator’ business.

Businesses might stay small due to various reasons. Some entrepreneurs prefer manageable operations to maintain quality or personal control. Limited access to funding, resources, or skilled labour can restrict growth.

Market niche focus or serving local communities may also limit expansion. Fear of risk or market uncertainty can deter scaling. Regulatory burdens or competition pressures might constrain growth.

Additionally, some businesses intentionally choose to stay small to avoid complexities or maintain a specific company culture. These factors collectively contribute to businesses opting for smaller scales despite potential opportunities for growth.

I have prepared a lesson, watch as you will find it very useful. This video covers the who lesson!

1.3.4 Why some (new or established) businesses fail:

• Causes of business failure, e.g. lack of management skills, changes in the business environment, liquidity problems
• Why new businesses are at a greater risk of failing

Business failures can stem from various reasons, affecting both new startups and established companies:

Poor Planning: Inadequate market research, flawed business models, or insufficient financial planning can lead to failure.

Lack of Market Fit: Not meeting consumer needs, misjudging the market demand, or failing to adapt to changing trends can cause a business to falter.

Financial Challenges: Cash flow problems, mismanagement of funds, or overestimating revenue can cripple a business.

Competition and Innovation: Inability to innovate or differentiate from competitors can render a business irrelevant or outpaced in the market.

Leadership Issues: Weak management, lack of vision, or internal conflicts can impede growth and success.

External Factors: Economic downturns, unforeseen market changes, or legal/regulatory issues can significantly impact businesses.

Ineffective Marketing: Poor branding, marketing strategies, or inadequate customer acquisition efforts can limit growth.

Operational Problems: Inefficient processes, logistical issues, or inadequate infrastructure can hinder scalability.

Failure to Adapt: Inability to pivot or adapt to changing customer preferences, technology advancements, or industry shifts can lead to obsolescence.

Overexpansion or Rapid Growth: Growing too quickly without proper infrastructure or resources can strain a business beyond its capacity.

Success in business often requires a blend of strategic planning, market responsiveness, financial prudence, innovation, and adaptability. Failure may result from a combination of these factors or the inability to address and overcome these challenges effectively.

I have prepared a lesson, watch as you will find it very useful. This video covers the who lesson!

1.2.1 Economic sectors in terms of primary, secondary and tertiary sectors:

• Basis of business classification, using examples to illustrate the classification
• Reasons for the changing importance of business classification, e.g. in developed and developing economies

To understand the classification of business, we need to understand what an economy is.

What is an economy?

Economy means the resources, riches and wealth of a country. the bigger the economy the better it is for the country. The economy may raise and fall at anytime. So that is why it is very important that the business and governments work together to ensure that economy is kept at a balanced level.

When we say economy, we mean that productions, distribution, trades and consumptions of goods and services of a country. all the things a country and businesses within that country produces.

All over the world, businesses are classified into three different sectors: Primary, Secondary and Tertiary.

Primary

Is where business deal with raw resources, of our planet earth. it is the extraction of natural resources, such as gas, oil, diamond and coal. Fishing and farming is also primary, it is the first process in making something into a product.

Secondary

This is where the businesses take raw materials from primary sector and produces an enhanced product. This sector processes the raw resources and turn them into products you see in supermarket shelf’s. it is also known as the production sector.

Examples: Refining, construction industry, Food industry, Glass industry, Electrical industry, Chemical industry and energy industry.

So the Primary sector extracts something from earth and secondary sector turns that into something we can use for example someone in primary sector will take extract diamond from earth, in the secondary sector that diamond is turn into a necklace or ring which is then sold in shops.

Tertiary

This sector focuses on providing services to consumers. They are not involved in extraction or production.

Examples: Sales people, repair services, Banking and insurance companies are all in this sector.

Remember that all three sectors depend on each other.

Watch this video lesson I have put together to understand this topic clearly.

Types of countries – Developed countries and developing countries

Developed countries – are those where manufacturing is imported or conducted with high standards, they have improved living standards, improved living standards, increased freedom/ self – esteem, most employed in tertiary sector, high level of productivity.

People in these economy have high income and investments with good standards of health care.

Developing countries – are the economy which has low incomes, lower investments compared to developed countries, low love expectancy, high population with high dependency ratio. They have low levels of education and care systems, reduced productivity and poor housing, high number workers of employed in primary sector

Some countries will be in between Developed and developing, they are known as the progressing countries.

Developed countries that works mainly in tertiary has some disadvantages as they will depend on the developing countries to provide them with basic needs of life; Clothes, food and so on. eventually these developing countries will progress which will have negative effect on developed countries as they will no longer have people working in primary sector of the economy.

Different economies

Countries are classified by size of different sectors of their business activity, this means which ever sector they depend on the most will place them in that sector of the economy.

Every country in the world is not the same, each have some specialities and has to work with other countries to import and export to meet the needs and wants of its citizens. Every country will focus on sector of the economy that they are good in and export to the rest of the world.

Example:

Lets compare England and Zimbabwe; their economies to get a better understanding of how they may work together to meet the needs of their citizens.

England is an economy with about 70% of its citizens working in Tertiary sector and less than 5% in primary sector.

Zimbabwe is an economy with 25% working in Tertiary and over 40% in primary.

So England may depend on Zimbabwe for their basic needs of life ( clothes and growing food, extraction of oil) and Zimbabwe may depend on England to provide them Tertiary sector services computing systems (software), banking systems and so on. Zimbabwe is an example of developing country.

To clearly understand this example watch my lesson below where I go into more details.

Industrialisation and De-industrialisation

De-industrialisation is when a country shifts from one sector of the economy to another for example from primary sector of the economy into secondary or tertiary.

This means that people worked in farms and oil extractions moves to work in offices and Production. It is the decline of a business activity which was once the main source of income for that country.

for example, England had over 50% people used to work in coal mines (Primary Sector) then De-industrialised into Tertiary because it was cheaper for them to import from emerging countries.

Disadvantages: The loss of jobs in rural area, break up of communities in rural areas as there will be no longer any jobs there, they have to move to town to find work.

Advantages: Less environmental pollution because extracting anything from earth causes pollution.

1.2.2 Classify business enterprises between private sector and public sector in a mixed economy

Private business are those that produces goods and services the consumers want and need. The business itself decides everything is controlled by the owner. profit is normally their main target.

Examples: Tesco, Asda, BP, your local corner shop

Public business are those that are owned by the government and are controlled by the local or national government department. They are main aim is to provide services to the public rather than making profit.

Examples: Schools, college and hospitals

Here I have prepared a test to help you understand this chapter well. Please make sure that you watch the lesson and read the notes from this website to make sure you are really ready for the exam.

Please make sure you take this Online practice test as many times as possible to make sure that you have fully understood this chapter.

Also make sure that you download and practice past exam papers to help you get familiarised with the exam question and style.

Watch and read all the lessons on this website and you will be able to get high grades.

In this page you will find all the tests and practices I have prepared for you to complete. Please ensure that you take all the tests available to maximise your chance of getting high grades.

Each Test will have around 10-20 questions and there is no time limit so you can take your time to read and understand the question and answer correctly.

I have put this test together to help you get good understanding of the topic so please take the test as many times as you can to ensure you have understood this chapter.

If you get any of the questions wrong do not worry, keep taking the test and go through the lesson again and again until you are confident.

Also make sure you take as many past exam papers as possible to help you get used to the exam environment and exam questions.

1.1.1 The purpose and nature of business activity:

• Concepts of needs, wants, scarcity and opportunity cost
• Importance of specialisation
• Purpose of business activity
• The concept of adding value and how added value can be increased

Purpose and nature of business activity

The main purpose of a business is to provide a service or goods that meet the needs and wants of its customers. Most businesses will provide their goods or services at a cost so they can make profit. However not all businesses are there to make profits it all depends on the nature of the business.

In simple words nearly all business will aim to generate revenue and profits to sustain operations, grow, innovation, and provide returns to shareholders or owners. Their Purpose is to meet our demand! This maybe by selling their services, goods or moneys collected from donors (charities).

All the shops you see, whether local or big co-operations will often contribute to economy, it will help it growth, create jobs for the locals, and help in development of society.

I have put together a video that covers this complete lesson. you will find it very useful as it goes deep into the topics and I have provided more examples in the video.

Goods and Services

Goods are things we can physically touch and see;

Examples: Cars, food, TV, Computers, water, the chair your sitting on, the clothes your wearing, the room your sitting in right now and so on.

Services are things we can not touch and are not there physically (intangible); however they still serve us and has a purpose:

Examples:

Car insurance – you can not touch or see it but its there to cover you against any damage to your car.

This website – its here to help you learn business studies and other subjects but you can not touch it

Bank services, government services, the internet it self is a service.

Social media – is a service it helps you connect with friends locally and anywhere in the world.

Needs and Wants

Needs are things that we need to survive, the very basic things in life without which we can live. These are the most important things in life. The every day essentials:

Example: Water, Food, clothes and shelter (house, a place to live)

Wants: These are things that we do not need to survive but would like to have. Wants can be unlimited, the more things we see in life the more will we will want. Wants are things that are not essential for everyday life.

Examples: branded watches, Nice cars, the latest phones and so on

Businesses and entrepreneurs invent and introduce new goods every minute and this increases the desire to want more. As humans we are never satisfied, we want more but the earth we live in has limited resources

Limited resources causes economic problems because there isn’t enough goods for everyone. Shortage of resources.

Scarcity

Scarcity is when there is not enough goods and services to meet the needs of everyone. When there is limited resources but high demand.

Scarcity is the gap between unlimited wants and limited resources. This situation forces businesses and entrepreneurs to allocate and make use of resources efficiently to meet all the basic needs of our populations and also as many wants as possible.

Scarcity has a formula which is: unlimited wants + limited resources = Scarcity

Factors of production

There are 4 factors to production, Land, Capital, Labour and Enterprise. I have explained each Below.

Land – all raw materials and natural resources. The physical land, Extractable natural resources such as coal, oil and gas

Capital – is money, it can also be investment. The Assets of the business. Man- made tools that help product such as equipment and machinery can also be our capital.

Labour – People who work in the business, workers who contribute to the production of goods and services, the skills of people

Enterprise – Bringing together the 4 factors of production together to produce goods or services that people want and need.

In Enterprise, we have (entrepreneurs) these are people that take risk to bring new inventions to the markets in hope to make profits, they are risk takers.

So we can see enterprise is taking risk and bring goods and service to the market for us the customers in hope to make some profits.

More examples are in the video!

Opportunity cost

loss of other alternatives when one alternative is chosen.

In every situation we have we have number of options, selecting one option will mean we will be losing out on all the other options.

Example:

Your friend is asking you to go cinema with them to watch the latest movie but you have an example coming up this week.

You choose to decline his offer and stay at home and study for the exam so you can get good grades.

The opportunity cost to you is that you missed out on the latest movie

another example:

You pay £100 to buy new shoes instead of paying for rent this month.

The opportunity cost is that the landlord will kick you out of the house and you become homeless.

Specialisation

Specialisation – is where a business or an individual is really good at a service, production of product or skill. The best of best in the field.

Examples

in medical we have doctors who specialise in dentists, operating technicians and lab doctors who work on producing tablets to cure certain illness.

Solicitors – some specialise in public matters, some specialise in civil matters.

You may have a business that specialises in producing packaging.

Division of labour

Dividing a job into many specialised parts with a single worker or few workers assigned to complete each part. Dividing the production process into different parts enabling individuals to focus on smaller tasks.

This helps in that individual becoming specialised in that specific task, resulting in efficiency.

Division of labour is important for mass production however there are advantages and disadvantages which we need to keep in mind.

Advantages: Saving time, as less movement of workers: Giving each employee tasks that best suits them will increase productivity

disadvantage: fall in motivation; as workers specialise in one task, they will be doing the same job day in, day out. if there is an absent worker, there maybe no one else to cover them.

Adding Value

When the selling price of an item produced is higher than the cost of all the resources used to make it. Raw materials. equipment, building, staff.

Adding value is enhancement or adding extra features to a product then offering it to customers.

It is the cost of materials that is used to make the product or service but it does not take into account rent and staff wages.

There are number of ways to add value to their product/ service

• after buy services
• personisle the product for you to suit you better
• give you options and different features

More examples in the video below!

3.1 Money and banking

Topic
3.1.1 money
3.1.2 banking

Guidance
The forms, functions and characteristics of money.

The role and importance of central banks and commercial banks for government, producers and consumers.

3.2 Households

Topic
3.2.1 the influences on spending, saving and borrowing

Guidance
Including income, the rate of interest and confidence – between different households and over time.

3.3 Workers

Topic
3.3.1 factors affecting an individual’s choice of occupation
3.3.2 wage determination
3.3.3 reasons for differences in earnings
3.3.4 division of labour/specialisation

Guidance
Wage and non-wage factors.

The influences of demand and supply, relative bargaining power and government policy, including minimum wage.

How changes in demand and supply, relative bargaining strengths, discrimination and government policy can all influence differences in earnings between workers whether they are:

skilled/unskilled; primary/secondary/tertiary; male/ female; private sector/public sector.

Definition, drawing and interpretation of diagrams that illustrate the effects of changes in demand and supply in the labour market.

Advantages and disadvantages for workers, firms and the economy.

3.4 Trade unions

Topic
3.4.1 definition of a trade union
3.4.2 the role of trade unions in the economy
3.4.3 the advantages and disadvantages of trade union activity

Guidance
Including engaging in collective bargaining on wages, working hours and working conditions; protecting employment; and influencing government policy.

Factors influencing the strength of trade unions. From the viewpoint of workers, firms and the government.

3.5 Firms

Topic
3.5.1 classification of firms
3.5.2 small firms
3.5.3 causes and forms of the growth of firms
3.5.4 mergers
3.5.5 economies and diseconomies of scale

Guidance
In terms of primary/secondary/tertiary sectors and private/public sector, and the relative size of firms.

Note: detailed knowledge of different types of structure of a firm is not required.

The advantages and disadvantages of small firms, the challenges facing small firms and reasons for their existence.

Internal growth, for example increased market share. External growth, for example mergers.

Examples, advantages and disadvantages of different types of mergers: horizontal, vertical, and conglomerate.

How internal and external economies and diseconomies of scale can affect a firm/industry as the scale of production changes.

3.6 Firms and production

Topic
3.6.1 demand for factors of production
3.6.2 labour-intensive and capital-intensive production
3.6.3 production and productivity

Guidance
Influences to include demand for the product, the price of different factors of production, their availability and their productivity.

The reasons for adopting the different forms of production and their advantages and disadvantages.

The difference between, and influences on, production and productivity.

3.7 Firms’ costs, revenue and objectives

Topic
3.7.1 definition of costs of production
3.7.2 calculation of costs of production
3.7.3 definition of revenue
3.7.4 calculation of revenue
3.7.5 objectives of firms

Guidance
Total cost (TC), average total cost (ATC), fixed cost (FC), variable cost (VC), average fixed cost (AFC), average variable cost (AVC).

Note: marginal cost is not required.

Calculation of TC, ATC, FC, VC, AFC and AVC.

Definition, drawing and interpretation of diagrams that show how changes in output affect costs of production.

Total revenue (TR) and average revenue (AR).

Note: marginal revenue is not required.

Calculation of TR and AR.

The influence of sales on revenue.

Survival, social welfare, profit maximisation and growth.

3.8 Market structure

Topic
3.8.1 competitive markets
3.8.2 monopoly markets

Guidance
The effect of having a high number of firms on price, quality, choice, profit.

Note: the theory of perfect and imperfect competition and diagrams are not required.

Characteristics, advantages and disadvantages of monopoly.

Note: diagrams are not required.

2.1 Microeconomics and macroeconomics

Topic
2.1.1 microeconomics
2.1.2 macroeconomics

Guidance
The difference between microeconomics and macroeconomics and the decision makers involved in each.

2.2 The role of markets in allocating resources

Topic
2.2.1 the market system
2.2.2 key resources allocation decisions
2.2.3 introduction to the price mechanism

Guidance
How a market system works; including buyers, sellers, allocation of scarce resources, market equilibrium, and market disequilibrium.

Establishing that the economic problem creates three key questions about determining resource allocation – what to produce, how, and for whom.

How the price mechanism provides answers to these key allocation questions.

2.3 Demand

Topic
2.3.1 definition of demand
2.3.2 price, demand and quantity
2.3.3 individual and market demand
2.3.4 conditions of demand

Guidance
Definition, drawing and interpretation of appropriate diagrams.

A demand curve to be drawn and used to illustrate movements along a demand curve with appropriate terminology, for example extensions and contractions in demand.

The link between individual and market demand in terms of aggregation.

The causes of shifts in a demand curve with appropriate terminology, for example increase and decrease in demand.

2.4 Supply

Topic
2.4.1 definition of supply
2.4.2 price, supply and quantity
2.4.3 individual and market supply
2.4.4 conditions of supply

Guidance
Definition, drawing and interpretation of appropriate diagrams.

A supply curve to be drawn and used to illustrate movements along a supply curve with appropriate terminology, for example extensions and contractions in supply.

The link between individual and market supply in terms of aggregation.

The causes of shifts in a supply curve with appropriate terminology, for example increase and decrease in supply.

2.5 Price determination

Topic
2.5.1 market equilibrium
2.5.2 market disequilibrium

Guidance
Definition, drawing and interpretation of demand and supply schedules and curves used to establish equilibrium price and sales in a market.

Definition, drawing and interpretation of demand and supply schedules and curves used to identify disequilibrium prices and shortages (demand exceeding supply) and surpluses (supply exceeding demand).

2.6 Price changes

Topic
2.6.1 causes of price changes
2.6.2 consequences of price changes

Guidance
Changing market conditions as causes of price changes.

Demand and supply diagrams to be used to illustrate these changes in market conditions and their consequences for equilibrium price and sales.

2.7 Price elasticity of demand (PED)

Topic
2.7.1 definition of PED
2.7.2 calculation of PED
2.7.3 determinants of PED
2.7.4 PED and total spending on a product/ revenue
2.7.5 significance of PED

Guidance
Calculation of PED using the formula and interpreting the significance of the result.

Drawing and interpretation of demand curve diagrams to show different PED.

The key influences on whether demand is elastic or inelastic.

The relationship between PED and total spending on a product/revenue, both in a diagram and as a calculation.

The implications for decision making by consumers, producers and government.

2.8 Price elasticity of supply (PES)

Topic
2.8.1 definition of PES
2.8.2 calculation of PES
2.8.3 determinants of PES
2.8.4 significance of PES

Guidance
Calculation of PES using the formula and interpreting the significance of the result.

Drawing and interpretation of supply curve diagrams to show different PES.

The key influences on whether supply is elastic or inelastic.

The implications for decision making by consumers, producers and government.

2.9 Market economic system

Topic
2.9.1 definition of market economic system
2.9.2 advantages and disadvantages of the market economic system

Guidance
Including examples of how it works in a variety of different countries.

2.10 Market failure

Topic
2.10.1 definition of market failure
2.10.2 causes of market failure
2.10.3 consequences of market failure

Guidance
The key terms associated with market failure: public good, merit good, demerit good, social benefits, external benefits, private benefits, social costs, external costs, private costs.

With respect to public goods, merit and demerit goods, external costs and external benefits, abuse of monopoly power and factor immobility.

Examples of market failure with respect to these areas only.

The implications of misallocation of resources in respect of the over consumption of demerit goods and goods with external costs, and the under consumption of merit goods and goods with external benefits.

Note: demand and supply diagrams relating to market failure are not required.

2.11 Mixed economic system

Topic
2.11.1 definition of the mixed economic system
2.11.2 government intervention to address market failure

Guidance
Definitions, drawing and interpretation of appropriate diagrams showing the effects of three government microeconomic policy measures:

maximum and minimum prices in product, labour and foreign exchange markets; indirect taxation; and subsidies.

The implications of other government microeconomic policy measures: regulation; privatisation and nationalisation; and direct provision of goods.

The effectiveness of government intervention in overcoming the drawbacks of a market economic system.

1.1 The nature of the economic problem

Topic
1.1.1 finite resources and unlimited wants

1.1.2 economic and free goods

Guidance

Definition and examples of the economic problem in the contexts of: consumers; workers; producers; and governments.

The difference between economic goods and free goods.

1.2 The factors of production

Topic
1.2.1 definitions of the factors of production and their rewards

1.2.2 mobility of the factors of production

1.2.3 quantity and quality of the factors of production

Guidance

Definitions and examples of land, labour, capital and enterprise. Examples of the nature of each factor of production.

The influences on the mobility of the various factors.

The causes of changes in the quantity and quality of the various factors.

1.3 Opportunity cost

Topic
1.3.1 definition of opportunity cost

1.3.2 the influence of opportunity cost on decision making

Guidance
Definition and examples of opportunity cost in different contexts.

Decisions made by consumers, workers, producers and governments when allocating their resources.

1.4 Production possibility curve (PPC) diagrams

Topic
1.4.1 definition of PPC

1.4.2 points under, on and beyond a PPC

1.4.3 movements along a PPC

1.4.4 shifts in a PPC

Guidance

Definition, drawing and interpretation of appropriate diagrams.

The significance of the location of production points.

Movements along a PPC and opportunity cost.

The causes and consequences of shifts in a PPC in terms of an economy’s growth.