Shell: Economics Revision Guide Summer 2014

The Basic Economic Problem:

Is that there are unlimited wants but there
are limited recourses.

Opportunity Cost:

Is the cost of the best alternative that is
given up when making a decision.

The Production Possibility Curve:

It shows the point of production where it s
used most effectively.

The points cannot exceed the curve
unless there is an increase in the factors
of production.

What is Globalization? :

Globalization is where organizations or
business develop international
connections/influences.

Advantages Disadvantages
Poverty Decrease Small firms cannot
compete
Economic Growth Can use market
power to undercut
prices
More Jobs Cheap Labour
Increase in PPC
curve
Child Labour
Increase
production through
specialization
Too much power
More consumer
choice
Money goes back
to firm home
Higher level of
education
Countries may
undercut local
producers.


Examples of globalization:

- Companies outsourcing This
can be negative because this
can increase profit and decrease
wages.
- Technology This is positive
because it opens new
opportunities to many
unprivileged.

Division of Labour:

This is when workers get special
jobs and activities to focus on rather
than doing many things at once.

This can be done through
specialization.

Advantage
s
Disadvantages
Cons
umer
s
High
Quality

More
products

Work
ers
Simple
Training
Less Pride
More
cooperatio
n
Continuous
work
Produ
cers
More
production
Limited by the
size of the
market
Lower
costs


What is an MNC? :

An MNC is a multi-national
company that is registered in more
than one country and produces
goods in more than one country
MNCs Advantages Disadvantages
Consumers
More variety Too much power?
Lower Price Quality?
Countries
Increase in economical
growth: employment level,
income level etc.
May undercut local hosts
prices and affect the local
market greatly.
LEDCs get more
technology through MNCs
May need national
recourses causing
depletion.
Workers More jobs and increase in
economical growth for
host country
Low pay as money flows
towards royalty, dividends
etc.
More cultures brought
through MNCs