CHAPTER 3 THE ECONOMIC PROBLEM Flashcards
Basic economic problem
Resources have to be allocated between competing uses because wants are infinite whilst resources are scarce.
Capital
As a factor of production is the stock of manufactured resources used in the production of goods and services.
Choice
Economic choices involve the alternative uses of scarce resources.
Economic goods
Goods that are scarce because their use has an opportunity cost.
Entrepreneurs
Individuals who seek out profitable opportunities for production and take risks in attempting to exploit these.
Enterprise or entrepreneurship
As a factor of production is the seeking out of profitable opportunities for production and taking risks in attempting to exploit these.
Factors of production
The inputs to the production process: land, labour, capital and enterprise or entrepreneurship.
Fixed capital
Economic resources such as factories and hospitals which are used to transform working capitals into goods and services.
Free goods
Goods that are unlimited in supply and which therefore have no opportunity cost.
Human capital
The value of the productive potential of an individual or group or workers; it is made up of the skills, talents , education and training of an individual or group and represents the value of future earnings and production.
Labour
As a factor of production is the workforce.
Land
As a factor of production , is all natural resources.
Needs
The minimum this is necessary for a person to survive as a human being.
Non-renewable resources
Resources, such as coal or oil , which once exploited cannot be replaced.
Non- sustainable resource
A resource which an be economically exploited in such a way that its stock is being reduced over time.
