Any event which changes the factors of production for one good, and not the other. e.g. an invention for one industry
Constant
The basic economic problem states that resources have to be allocated between competing uses because wants are infinite while resources are scarce.
Opportunity cost is shown by moving along the curve of the PPF. Gaining more of one good means you give up some of another.
-Living Standards are lower: Workers don’t make more, so they aren’t paid more. The only thing that makes society better off in the long-term is productivity growth.
-International Competitiveness: UK unit costs will be higher, so we will export less to rest of the world.
-Less Tax Revenue: Less is made per worker, so there is less tax (income tax) paid per worker
Productivity = Output per Input
Utility describes the usefulness of a product.
Capital refers to the machines and equipment that businesses use as part of their production process
Because workers produce a narrower range of output and they would not be able to barter. Money is required to avoid the double coincidence of wants.
