Chapter 1, The Nature Of The Economic Problem Flashcards
What is the simplest way to describe the nature of the economic problem?
Finite resources and unlimited wants
Define ‘The Basic Economic Problem’
How best to allocate scarce resources in order to satisfy people’s unlimited needs and wants
Who are the three main economic agents (or decision makers) in an economy?
- Individuals or households
- Firms (businesses which operate in the private sector of the economy)
- The government
What are the three basic economic questions addressed by economic agents?
- What to produce?
- How to produce it?
- For whom to produce it?
Complete the following sentence:
All economic agents ___________(1) and ____________(2) goods and services.
(1) Produce
(2) Consume
Define the term ‘Goods’ and give an example.
Physical items that can be produced, bought and sold. E.g Furniture
Define the term ‘Services’ and give an example.
Non-physical items. E.g bus journeys
State what is meant by a ‘Need’ and give an example.
A good or service essential for living, such as water.
State what is meant by a ‘Want’ and give an example.
A good or service which people would like to have, but which is not essential for living.
What are ‘Economic Goods’? Give 3 examples of economic goods.
Economic goods are those which are limited in supply, such as:
1. Oil
2. Wheat
3. Cotton
Complete the following sentence:
Economic goods are _________(1) in relation to _________(2) as human efforts is required to obtain an economic good.
(1) Scarce
(2) Demand
What are ‘Free Goods’? Give 3 examples of free goods.
Free goods are goods which are unlimited in supply, such as:
1. Air
2. Seawater
3. Sunlight
Fill in the gap:
There is no ____________ ___________ in the production or consumption of free goods.
Opportunity cost
What is the public sector of an economy?
The government
