1. The Basic Economic Problem Flashcards
What is the basic economic problem?
Finite resources and unlimited wants
Because the basic economic problem, consumers, workers, producers, and governments are forced to make ______
Choices
What are economic goods?
A product which requires resources to produce and therefore has an opportunity cost. (eg. clothes, books)
What are free goods?
A product which doesn’t require any resources to make and does not have an opportunity cost. (eg. air)
What are the 4 factors of production?
C: Capital
E: Enterprise
L: Land
L: Labour
What is land?
Gifts of nature available for production.
Rewards for each factors of production?
C: Interest
E: Profit
L: Rent
L: Wage
What are capital goods?
human- made goods used in production.
What are consumer goods?
goods and services purchased by households for their own satisfaction.
What is enterprise?
risk bearing and key decision making in business.
Occupational mobility
Capability of changing use
Geographical mobility
capability of moving from one location to another location.
What is a depreciation (capital consumption) of goods?
The value of capital goods that have worn out or become obsolete.
What is Gross investment?
Total spending on capital goods.
What is Net investment
= gross investment - depreciation.
