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?
Scarcity/limited resources and unlimited wants.
What economics decisions are needed?
WHAT to produce
WHAT resources are to be used
HOW are they to be produced
WHO is to get the goods
What is 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?
Wants are desires individuals would like to have satisfied but are not necessary to sustain life. Wants are unlimited.
What is choice?
A decision made between alternatives.
What is opportunity cost?
The next best alternative FOREGONE when a decision is made. (the second ranked ulternative given up when a choice is made)
What are our needs?
Food, water, shelter and clothing
What are luxury goods?
Are goods we want to have to make life better but NOT essential for our needs.
What are limited means?
Time resources family and skill
What are basic goods?
Just the essentials to let us survive.
What tyoes of production are there?
Goods
Services
What are the two differences between wants + needs?
Needs are life where as wants are not. Needs are limited where as wants are unlimited
