1.1.1 - The Economic Problem

Question 1

Definition - scarce resource

Answer 1

Something there is a limited, finite amount of

Question 2

Definition - Opportunity cost

Answer 2

The next best alternative forgone

Question 3

Definition - Trade-off

Answer 3

The consequences of an action

Question 4

Definition - Utility

Answer 4

Satisfaction

Question 5

What is the problem of scarcity?

Answer 5

Unlimited wants and finite resources

Question 6

Factors of production

Answer 6

Land - natural resources available for production
Labour - human input into the production process
Capital - goods used in the supply of products
Enterprise - entrepreneurs organising the factors of production

Question 7

Consumer durables

Answer 7

Provide steady flow of utility throughout life cycle

Question 8

Consumer non-durables

Answer 8

Used up in consumption

Question 9

Consumer services

Answer 9

A service provided

Question 10

Difference between opportunity cost and trade-off

Answer 10

Opportunity cost is what someone could have done with the sacrificed opportunity. A trade-off describes what is sacrificed.