1.1 The Economic Problem

Question 1

Explain what an economic good is

Answer 1

A product or a service which costs a price.
E.G. food, electricity, holidays

Question 2

Explain what a free good is

Answer 2

A product or service which is accessible by everyone, has no cost and is abundant in its amount.
E.G. sunlight, air. NOT WATER

Question 3

Explain the economic problem

Answer 3

The main issue of economics is scarcity. This is where people having unlimited wants, however resources to fulfill these wants are limited. This means a choice must be made on how to allocate these resources.

Question 4

Explain what a normative statement is.

Answer 4

A statement based upon opinions / judgements as opposed to facts.
E.G. the goverment should / ought to do this

Question 5

Explain what a positive statement is.

Answer 5

A statement based purely and solely upon facts.
E.G. The cost of living is / will increasing

Question 6

Explain the role of the government as an economic agent

Answer 6

• Responsible for providing goods and
  services and regulating businesses.
• Responsible for regulating businesses
• Responsible for stability (fiscal/monetary
  policies)