1.1 The Nature of the Economic Problem

Question 1

Define the Basic Economic Problem

Answer 1

Unlimited wants, but limited resources resulting in scarcity

Question 2

Define Needs

Answer 2

Essentials for human life (eg. food)

Question 3

Define Wants

Answer 3

Desires that aren’t essential (eg. yacht)

Question 4

Define Economic Goods

Answer 4

Goods that have a value, are scarce and have an opportunity cost (eg. oil)

Question 5

Define Free Goods

Answer 5

Goods that have no opportunity cost and are abundant (eg. air)