1.1.3 Flashcards
The economic problem
Fundamental (basic) economic problem
The best allocation of finite (scarce) resources in the face of infinite wants
Capital
A factor of production used to produce other goods and services
Choice
Decisions about the alternative uses of scarce resources
Opportunity cost
The benefits of the next best alternative forgone
Economic goods
Goods that are scarce because they have an opportunity cost
Free goods
Goods that are unlimited in supply and have no opportunity cost
Wants
Desire for consumption of goods and services - a contrast with needs
Needs
The minimum necessary for survival
Land
A factor of production - all natural resources
Labour
A factor of production - the workforce
Non-renewable resources
Resources such as coal or oil which once exploited cannot be replaced
Renewable resources
Resources which can be exploited over and over because they have the potential to renew themselves
Scarce resources
Resources that are limited in supply and so choices have to be made about their use - non-renewable resources can be an example of this
Sustainable resources
A renewable resources that is being economically exploited in such a way that it will not diminish or run out
Working capital
Resources in the production system waiting to be transformed into goods or semi-finished goods before being sold to consumers
