Define Economics, Elements Of Economics And concept Of Scarcity And Availability Flashcards
(17 cards)
Define economics
It is a social science that studies the allocation of scarce resources to satisfy unlimited wants and needs, examining how individuals, firms, governments and societies make decisions about the production, distribution and consumption of goods and services and analyzing the consequences of the decisions on economic efficiency, equity and growth. It also involves the problems of depression and unemployment, deflation and inflation, business and labor and the effects of government expenditures and taxes.
What are the three elements of economics?
- Production
- Consumption
- Distribution
Explain production
Is the process of creating goods and services by combining factors like raw materials, labour and capital to generate outputs that have value to consumers or meet their demands.
Provide an example of production
To make flour there is need for land to grow the wheat, labour which is the human element of production and capital e.g. a steel mill.
Define consumption
This is the use of goods and services to satisfy one’s needs. It involves the purchase of goods and services by households, individuals and other organizations.
How does consumption drive production and distribution?
It helps predict trends in order to balance supply and demand.
Define distribution
This is the allocation of goods and services produced within an economy from producers to consumers through various channels like markets and transportation.
Provide an example of distribution
Bakers Inn transports bread to Greens Supermarket.
What is scarcity?
Scarcity is an economic problem of having limited resources which cannot meet all demands placed on them to meet unlimited wants.
What are the types of scarcity?
- Natural resource scarcity
- Labor scarcity
- Capital scarcity
Explain opportunity cost in relation to scarcity
Choosing one option means forgoing another and can lead to an increase in prices of goods and services.
Provide an example of how scarcity affects property values
Desirable locations like properties closer to the Central Business District are not enough for all who want them, driving up property values.
Define availability in economics
This is when resources are accessible to use.
What factors contribute to availability?
- Physical availability
- Economic availability
- Market conditions
- Policy constraints
Give an example of physical availability
Regions near rivers or forests have better access to water and timber.
What is economic availability?
It includes ownership rights and affordability that determine who can access resources.
Provide an example of how policy affects availability
Relaxed zoning laws might increase the availability of housing in urban areas.
