THIS LACK OF SUFFICIENT RESOURCES RELATIVE TO PEOPLE’S WANTS IS CALLED AND OF THE PERSON WHO BRINGS THE OTHER FACTORS TOGETHER TO CREATE A THESE PEOPLE ARE CALLED = THE NEXT BEST ALTERNATIVE GIVEN UP WHEN YOU CHOOSE. IN OTHER WORDS’THE COST OF CHOICE’. IT HELPS PEOPLE MAKE MORE ACCURATE SUGGESTIONS FOR THE ALLOCATION OF SCARCE RESOURCES IN THE ECONOMY A FIRM OWNED AND RUN BY A MEMBER OF THE PUBLIC. A FIRM OWNED AND RUN BY THE GOVERNMENT. AS THERE ARE NOT ENOUGH RESOURCES TO PRODUCE EVERYTHING FIRMS HELP MAKE CHOICES ABOUT - ...AND THEREFORE, WE CAN NOT SATISFY OUR IN ORDER TO SATISFY AS MANY WANTS AND NEEDS AS POSSIBLE, GIVEN THE LIMITED QUANTITY OF PRODUCTIVE RESOURCES, BUSINESSES/WORKERS/COUNTRIES IN PRODUCING THE GOOD OR SERVICE THAT THEY ARE BEST SUITED FOR. THIS WAY EACH UNIT WILL PRODUCE A SURPLUS OF THE GOOD, WHICH THEY CAN TRADE FOR THE GOODS THEY DON’T MAKE. - NATURAL RESOURCES - FORESTS, FIELDS... - MINERALS: OIL, GAS... - PEOPLE (HUMAN - EFFORT) NEEDED TO MAKE PRODUCTS... MAN - MADE RESOURCES: - MACHINERY - EQUIPMENT + + + + FEW PEOPLE ARE SELF - SUFFICIENT AND ABLE TO MAKE ALL THE THEY NEED AND WANT; WE THEREFORE RELY ON BUSINESS ACTIVITY TO PRODUCE GOODS & SERVICES TO SATISFY OUR & GOODS & SERVICES ARE PRODUCED BY THE COMBINATION OF ‘PRODUCTIVE RESOURCES’ KNOWN AS HOWEVER THESE RESOURCES ARE LIMITED. HOW TO INCREASE THE DIFFERENCE BETWEENTHE AND THE ? HOW TO THE ? THROUGH SPECILISATION, RESULTS IN LOWER AVERAGE COSTS. FIND E.G. IMPORTS HOW TO THE ? OF THE PRODUCT INTO A MORE IN DEMAND PRODUCT EG. BREAD & SUASAGE INTO A HOTDOG. TO MAKE THE PRODUCT MORE WELL - KNOWN & APPEALING. TO THE CONSUMER E.G. OFFER AFTER - SERVICES SUCH AS WARRANTIES. , CONSUMERS WILL LOYALLY FOLLOW EVEN IF PRICE RISES THE FIRM THUS SPECIALISES IN THE PRODUCTION OF A PARTICULAR GOOD OR SERVICE. DURING PRODUCTION, THEY AND ATTEMPT TO TO SELL TO . IF THE SELLING PRICE , THEN THE PRODUCERS HAS THIS EXCESS AMOUNT IS THEN USED TO PAY OTHER BUSINESS COSTS SUCH AS WAGES, RENT ETC.. AND FINALLY, WHAT IS LEFT IS CALLED ‘ = REVENUE – COSTS. IF REVENUE > COSTS = PROFIT IF REVENUE < COSTS = LOSSES SPECIALISE IN THE PRODUCTION OF THE GOODS AND SERVICES THAT THEY ARE MOST SKILLED AT. E.G. MR. BOUNOUS, SPECIALISES IN TEACHING BUSINESS STUDIES, THEN USES HIS INCOME TO EXCHANGE FOR GOODS & SERVICES HE DOESN’T PRODUCE, E.G.BEER. SPECIALISE IN THE PRODUCTION OF THE GOODS AND SERVICES THAT THEIR ARE MOST SUITABLE FOR. E.G. CHINA SPECIALISES IN THE MANUFACTURE OF LABOUR - INTENSIVE PRODUCTS. AND THEN TRADES THEIR SURPLUS FOR GOODS THEY DON’T PRODUCE. REFERS TO THE DIVIDING UP OF A PRODUCTION PROCESS INTO SEQUENTIAL TASKS, EG, THE CHANGING OF TYRES & REFUELING AT AN F1 PIT - STOP. ✓ WORKERS E.G MESSI SPECIALISES IN FOOTBALL. ✓ WORKERS E.G. LEBRON JAMES PRACICING 3 - THROWS EVERYDAY. ✓ HIGHER PRODUCTIVITY, MEANS , SO CUSTOMER PRICES MAY BE LOWER AND OUTPUT GREATER. THE PROCESS IS RELIANT ON ALL WORKERS, SO IF ONE WORKERS AND EVENTUALLY THEIR PRODUCTIVITY FALLS. WORKERS WILL ONLY ATTAIN A NARROW RANGE OF SKILLS MAKING IT WORKERS CAN INN THE FUTURE, E.G. ATM, MC DONALD’S TOUCHSCREEN MENU.