Chapter 11- Scarcity & Choice

Question 1

Economics

Answer 1

Is the study of how people, businesses and governments who have limited resources (e.g. money) make choices and decisions to meet their needs.

Question 2

Economic resources

Answer 2

Are the factors (things) used to produce and distribute goods and services to businesses and people.

Question 3

A need

Answer 3

Is something essential for survival e.g. food.

Question 4

A want

Answer 4

Is anything that we would like to have but do not need to survive e.g. a holiday.

Question 5

An opportunity cost

Answer 5

Is the item you do not buy in order to buy another item.

Question 6

The financial cost

Answer 6

Is the price of the item you choose to buy.

Question 7

The Factors of Production are (definition)

Answer 7

The economic resources needed to produce goods and services.

Question 8

The 4 Factors of Production are:

Answer 8

Land, Labour, Capital, Enterprise.

Question 9

Land:

Answer 9

Anything provided by nature to produce goods and services e.g. fields, forests.

Question 10

Labour:

Answer 10

The people involved in producing a good or service (workers/employees) e.g. teachers, factory workers.

Question 11

Capital:

Answer 11

This refers to the physical items used in making goods and services e.g. machinery, computers.

Question 12

Enterprise:

Answer 12

Brings land, labour and capital together to produce a product or service e.g. Steve Jobs, Mark Zuckerberg.

The ‘idea’ behind a good or service. An entrepreneur takes a personal and financial risk in making their idea a reality.

Question 13

Example: Ben and Jerry’s Factors of Production
Land:

Answer 13

Cows (produce milk) graze on the land. Sugar beet and fruit are grown to make flavourings.

Question 14

Example: Ben and Jerry’s Factors of Production
Labour:

Answer 14

Ben & Jerry’s employ staff to produce ice-cream.

Question 15

Example: Ben and Jerry’s Factors of Production
Capital:

Answer 15

Machinery and equipment are required to make the ice-cream, while delivery vans deliver it to shops.

Question 16

Example: Ben and Jerry’s Factors of Production
Enterprise:

Answer 16

Ben Cohen and Jerry Greenfield founded the business by investing $12,000 and opening a shop in a former gas station in Vermont, USA in 1978 after they completed a course in ice-cream making.

Question 17

The 4 Factors of Production and their rewards:

Answer 17

Land= rent,
Labour= wages,
Capital= interest,
Enterprise= profit.