The Basic Economic Problem Flashcards
What does limited resources mean?
There are not enough resources to produce all of the goods and services that consumers want
What does unlimited wants mean?
Individuals, businesses and governments always want more
What does scarcity mean?
It is the basic economic problem. It arises because there are limited resources and unlimited wants but choices must be made
What is a need?
Something that we consider that we can’t live without
What is a want?
Something that we can live without but will improve our standard of living
What are the factors of production?
Capital, Enterprise, Land and Labour (CELL)
What is capital?
Man- made resources
What is enterprise?
The business idea or the combination of the other factors
What is land?
The natural resources
What is labour?
The human workforce
Why is scarcity a problem?
No country in the world has enough resources to produce enough goods and resources to satisfy completely the wants of its people
What does shortage mean?
Demand for a good is greater than the current supply
Why do we have limited resources? (capital)
It isn’t occupationally mobile but it is geographically mobile
Why do we have limited resources? (enterprise)
It is occasionally mobile as you can change your idea and it is geographically mobile
Why do we have limited resources? (land)
It is occasionally mobile however is is not geographically mobile as its finite
