Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 2 - The Market System and the Circular Flow - Discussion Questions: 4

Answer

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Work Step by Step

Capital: Capital has to do with the funds that a business has to begin an enterprise. Those with more capital can invest more money into an enterprise and thus have an advantage. Division of Labor: This occurred because owners realized it was more efficient to divide labor into specific tasks for each person than to have everyone doing a bit of everything. Specialization: This refers to the fact that when people do specific tasks as opposed to a broad set of tasks, they become very good at the specific task, making the business more efficient.
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