The economic problem Flashcards
(13 cards)
What are economic goods?
Goods that are scarce
Define scarcity
When there aren’t enough products or resources to satisfy wants and needs at 0 price
Define free goods
Goods that aren’t associated with opportunity cost
What is the basic economic problem?
There are unlimited wants and needs but resources are scarce
What are the key economic questions?
- What to produce
- How to produce
- Who to produce for
Define renewable resources
Resources that can be replenished
Define non renewable resources
Resources that cannot be replenished
Define opportunity cost
The value of the next best alternative forgone
Define trade off
The benefit given up by not choosing the other alternatives
What is marginal analysis?
It is an approach to economic decision making based on considering the additional benefits and costs of a change in behaviour
What are the 3 main economic agents?
- Consumers
- Producers
- Government
Define and state the factors of production
Factors of production are resources used in the production process. They are:
-Land
-Labour
-Capital
-Enterprise
What are the rewards of the factors of production?
Land - Rent
Labour - Wages/Salaries
Capital - Interest
Enterprise - Profit
