1.1.3 The Economic problem Flashcards
What is a need?
A required essential for a human to survive
What is a want?
A desire which someone has an infinite list of
What are free goods?
Resources which are not scarce
What are economic goods?
Resources which are scarce
What is the problem of scarcity?
Resources are scarce but wants are infinite.
What is Opportunity Cost?
The next best alternative that you give up in making that decision
What are the three fundamental questions needed as there is an endless array of things that could be produced and consumed but only limited resources?
- What to produce?
- How to produce it?
- Who to produce it for?
What are producers?
Firms or people that make goods or provide services
What are consumers?
People or firms who buy the goods and services
What are Governments?
A government sets the rules that other participants in the economy have to follow, but also produces and consumes goods and services
What are ways to ration scarce resources?
- By Market Price
- By Consumer income
- By assessment of need
- By household postcode
- By Education level
- By age
- By Gender
- By nationality
What are the factors of production?
- Land
- Labour
- Enterprise
- Capital
What is Land?
Natural resources available for production
What is Labour?
The human input into the production process
What is Enterprise?
Entrepreneurs organise factors of production and take risks
