1.1 The Economic problem

Question 1

The economic problem

Answer 1

How best to use limited resources to satisfy the unlimited wants of people

Question 2

Scarce resources

Answer 2

When there is an insufficient amount of something to satisfy all wants

Question 3

Normative statement

Answer 3

A statement involving a value judgement about what ought to be

Question 4

Positive statement

Answer 4

A statement about what it is ie about facts

Question 5

Economic agent

Answer 5

A person, company of organisation that has an influence on the economy by producing, buying or selling

Question 6

Factors of production

Answer 6

Resources used in the production process; inputs into production, including land, labour, capital and entrepreneurship

Question 7

Land

Answer 7

Natural resources in an economy

Question 8

Labour

Answer 8

The quantity and quality of human resources

Question 9

Capital

Answer 9

Man-made aids to production

Question 10

Entrepreneurship

Answer 10

An individual who bears the risk of business and who organises production

Question 11

Rational decision making

Answer 11

A decision that allows an economic agent to maximise their objective by setting the marginal benefit of an action equal to its marginal cost