General Terms and Definitions Flashcards
Define Economics?
Economics is the study of solving the problem of how to allocate SCARCE RESOURCES that have alternative uses so as to maximise SATISFACTION of consumers NEEDS and WANTS.
What conditions are needed for Economics?
Scarcity/Limited Resources and Unlimited Wants.
What economic decisions are needed?
What to produce.
What resources are to be used.
How it will be produced.
Who is going to get the goods.
What are needs?
Things individuals must have satisfied in order to sustain life.
What happens when needs are not met?
Long Term - You will die
What are wants?
Desires individuals would like to have satisfied but are not necessary to sustain life. Wants are unlimited.
What are limited means
The condition of limited resources relative to wants. They are money, time, skills and family.
What is choice?
A decision between various alternatives when you have limited means.
What is opportunity cost
The next best alternative FOREGONE when a decision is made. (The second ranked alternative given up when a choice is made).
What are our needs?
Food, Water, Shelter and Clothing.
What are basic goods?
Goods we need to survive.
What are the two differences between needs and wants?
Needs are things people need to survive but wants are not.
Needs are limited but wants unlimited.
