scarcity Flashcards
(12 cards)
What is the basic economic problem?
Resources are scarce compared to infinite wants and needs
This scarcity requires choices about resource allocation.
What are the factors of production in economics?
Resources used to produce goods and services
These include land, labor, capital, and entrepreneurship.
What distinguishes needs from wants?
Needs are essential; wants are non-essential
Examples of needs include shelter and food, while wants include luxury items.
Who are the stakeholders in an economy that face the basic economic problem?
- Consumers
- Producers
- Workers
- Government
All these groups must make choices due to scarcity.
How does scarcity influence prices in a free market?
Scarcer resources lead to higher prices
Producers face increased costs when using scarce resources.
What is opportunity cost?
The loss of the next best alternative when making a decision
It is a fundamental concept in economics affecting decision-making.
How does opportunity cost affect resource allocation?
It influences how limited resources are allocated among competing wants and needs
Understanding opportunity cost can lead to different decisions.
Fill in the blank: When a consumer chooses to purchase a new phone, the jeans they cannot buy represent the _______.
opportunity cost
This illustrates the concept of opportunity cost in consumer choices.
What example illustrates a consumer’s opportunity cost in decision making?
Ashika’s choice of flight to Iceland
She considers the income lost from choosing a cheaper flight.
What factors did Ric consider when deciding between two job offers?
- Salary difference
- Commuting costs
- Value of time saved from commuting
Ric valued his free time highly, which influenced his decision.
True or False: The decision to take Job A over Job B is solely based on salary.
False
Ric also considered commuting costs and the value of time.
What is the impact of considering opportunity costs in decision making?
It often leads to different outcomes and resource allocations
This consideration can change choices made by various stakeholders.
