1.1 The Economic Problem Flashcards
What is an economy?
An economy is all the goods and services produced in an area
What is the difference between a good and a service?
A good is tangible
A service is intangible
What is factors of production?
They are the resources used to produce goods and services
Name the 4 factors of production
Capital
Enterprise
Land
Labour
What is capital? (Give some examples)
Capital are things which are used to make goods and services.
For example:
Machinery
Tools
Equipment
What is enterprise?
Enterprise is the willingness of people in business to take risks and make profit (Entrepreneurs)
What is land? (Give examples)
Land refers to the natural resources within an economic system.
For example:
Oil
Forests
Land itself
What is the difference between finite and renewable?
Finite is not sustainable
Renewable is sustainable
What is labour?
All of the work done by humans in production
What is the economic problem?
How to use the available resources to satisfy peoples infinite wants and needs as effectively as possible
What are 3 questions that governments face?
- What to produce?
- How to produce it?
- Who to produce it for?
What are economic agents?
They are groups that participate in the economy
Who are the 3 economic agents?
Producers
Consumers
Government
What do producers do?
They create goods and services
What do consumers do?
They buy goods and services made by firms. Individuals and firms can be consumers
