The Economic Problem Flashcards
Who are economic agents (3)?
1) Consumers.
2) Producers.
3) Governments.
What are finite resources?
Resources that are limited, e.g. food, water, oil and land.
What are economic goods?
Resources that are scarce.
What is the basic economic problem?
How to fulfil unlimited consumer wants with limited resources - the issue of scarcity.
What are the 4 factors of production?
1) Land.
2) Labour.
3) Capital.
4) Enterprise.
What are renewable resources?
Resources that can be replenished. E.g. electricity and water.
What are non-renewable resources?
Resources that cannot be replaced once used. E.g. coal and gold.
What is opportunity cost?
The benefits forgone of the next best alternative when a decision is made.
What is an example of an opportunity cost?
If a firm chooses to use its profits to invest in securities instead of in capital goods, they forsake the potential profits generated by more efficient production.
