Scarcity & Choice - Chapter 11

Question 1

What is economics?

Answer 1

Economics is the study of how people, businesses and governments who have limited resources, make choices and decisions to meet their needs and wants.

Question 2

What are economic resources?

Answer 2

Economic resources are the factors used to produce and distribute goods, services and wealth.

Question 3

What is a rational choice?

Answer 3

A rational choice is one where the expected gains outweigh the expected losses.

Question 4

What are the factors of production?

Answer 4

The Factors of Production are the economic resources needed to produce goods and services.

Question 5

Identify the types of factors of production and the reward from each.

Answer 5

Land, labour, capital and enterprise
Land = Rent
Labour = Wages
Capital = Interest
Enterprise = Profit

Question 6

What three things do economic resources have in common?

Answer 6

Economic resources have three things in common:
1. They have value
2. They have alternative uses
3. They are all scarce or limited in supply