1 The basic economic problem

Question 1

the Economic Problem

Answer 1

unlimited wants exceeding finite resources

Question 2

Economic goods

Answer 2

A good or service that has a degree of scarcity and therefore an opportunity cost

Question 3

Free goods

Answer 3

A good or service that is not scarce and is avaliable in abundance.
E.g., the air

Question 4

Wants

Answer 4

desires for goods and services

Question 5

Resources

Answer 5

factors used to produce goods and services

Question 6

Capital/Capital goods

Answer 6

human-made goods used in production

Question 7

Consumer goods

Answer 7

goods and services purchased by households for their own satisfaction

Question 8

Entrepreneur

Answer 8

a person who bears the risks and makes the key decisions in a business

Question 9

Occupationally mobile

Answer 9

capable of changing use

Question 10

Geographically mobile

Answer 10

capaable of moving from one location to another location

Question 11

Mobility of labour

Answer 11

the ability of labour to change where it works or in which occpation

Question 12

Labour force

Answer 12

people in work and those actively seeking work

Question 13

Productivity

Answer 13

the output per factor of production in an hour

Question 14

Output

Answer 14

goods and services produced by the factors of production

Question 15

Investment

Answer 15

spending on capital goods

Question 16

Gross investment

Answer 16

total spending on capital goods

Question 17

Depreciation (capital consumption)

Answer 17

the value of capital goods that have worn out or become obsolete

Question 18

Net investment

Answer 18

gross investment minus depreciation

Question 19

Negative net investment

Answer 19

a reduction in the number of capital goods caused by some obsolete and wornout capital goods not being replaced

Question 20

Opportunity cost

Answer 20

the next best alternative forgone while making an economic decision

Question 21

Production possibility curve

Answer 21

a curve that shows the maxinum output of two types of products and combination of those products that can be produced with existing resources and technology

Question 22

Scarcity

Answer 22

a situation where there is not enough to satisfy everyone’s wants

Question 23

Mobility of capital

Answer 23

the ability to change where capital is used or in which occupation

Question 24

Mobility of enterprise

Answer 24

the ability to change where enterprise is used or in which occupation