Economics 2281

INTRODUCTORY CLASS
HUMA ESSA
Economics 2281

 Candidates appear in two papers

 Paper 1: MCQs – 30 marks
 Time: 45 mins
 Paper 2: Structured Questions- 70 marks
 Time: 2hours 15 mins
 Students answer 1 compulsory question that requires them to intepret and analyse
previously unseen data, and three questions from a choice of four.
 Unit 1: The Basic Economic Problem

Terms to remember:
 Wants
 Needs
 Resources
 Inputs
 Outputs
 Finite
 Infinite
 Factors of production
 Scarcity
Unit 1: The Basic Economic Problem

Terms to remember:
 Renewable resources
 Non renewable resources
Factors of production & their rewards

 Land- rent
 Labour- wages
 Capital- interest
 Enterprise- profit
 Mobility of factors of production

Factor mobility refers to the ease with which resources or factors of production can be
moved from one place to another without incurring cost or loss of output.
Factors of production may be moved:
 Within a firm
 Between firms in the same industry
 Between industries
 Between countries
 Why is factor mobility important?

 May increase the total output of goods and services.

 Allows factors of production to be moved in their best possible use.
 Enables firms to improve the way they produce different goods and services as the
quantity and quality of factors of production changes.
 Allows firms to change the types of goods and services they produce as human
needs and wants change.
Why are some factors more mobile than others?

 Moving factors of production from one use to another is not always easy or
without cost.
 Many workers are occupationally immobile
 Many workers are geographically immobile
 Specialised resources with specific characteristics or functions.
What affects the quantity and quality of factors of
production

 Some natural resources are non renewable such as fossil fuels, minerals and metal
ores. Once they have all been used, they cannot be replaced.
 Some scarce resources are renewable and it is possible to increase their quantity and
quality over time.
 We can show the impact of changes in the quantity and quality of factor resources on
production using production possiblity curve diagram. (PPC)
What affects the quantity and quality of factors of
production

Discovering new sources of natural resources and increasing both quantity and quality of
other factors of production available for productive use enables firms to:
 Produce more goods and services
 Produce a wider range of goods and services
 Improve the quality of goods and services
 Invent new products and ways of producing them.