Capital is anything man-made which is used in the production of goods and services.
Opportunity cost refers to the thing that is done without when choosing another option.
Microeconomics looks at the behaviour of consumers and businesses in different types of markets to try and understand their decision-making process.
q q q
Enterprise refers to the person or business that combines the other three factors of production to produce a product or service. q q q
q q q q q q
Macroeconomics looks at the decisions made at national and international level by governments bodies, such as the European Union, to understand how the economy works as a whole. q q q
Key Concepts 1. Explain what is meant by the term ‘economics’.
2. (a) Name and explain the four factors of production. (b) Explain, in your own words, the importance of enterprise in the production of goods and services.
3. Explain what is meant by the term ‘opportunity cost’.
4. Distinguish between the terms (a) microeconomics and (b) macroeconomics. Critical Thinking Skills
1. Freddy Jones set up and runs the Killarney Furniture Factory. It is a very successful business which employs twenty staff and uses state of the art equipment to produce a wide range of wooden tables, chairs and other furniture.
Describe how each of the factors of production might be used to make the business a success.
2. BMC Bank operates 200 branches across Ireland. The bank is profitable and has a budget of €100 million to expand the business over the next two years. It has identified four potential projects to spend the money on. 1. Open 50 new branches. 2. Invest in a new and more secure online banking system. 3. Purchase a rival bank. 4. Invest in a major new marketing campaign.
Which project would you select to invest €100 million in over the next two years? Explain your answer.
