1.1.1 The economic problem Flashcards
(10 cards)
What is the economic problem?
When there are finite resources available to supply unlimited wants.
What is economic activity?
Producing goods and services to meet wants and needs.
What is economic welfare?
The benefit that individuals, firms and society have as a result of goods and services being produced.
What is opportunity cost?
The benefit cost of the next best alternative when making a choice (making a choice to give up something)
What is a trade-off?
Multiple options to choose from and therefore more chances of loss.
What is an economic agent?
Firms, individuals or governments that partake in economic activity.
What is a free market economy?
Where firms decide what what goods and services to produce with limited economic intervention.
What to produce?
Economic incentives will provide economic agents with the information required to tell them what to produce>
How to produce?
Firms will combine the factors of production in order to produce a good or service.
For whom to produce?
If there is demand for a product a firm may wish to supply it.
