1.1.3 - Economic Problem

Question 1

What is the Basic Economic problem?

Answer 1

Resources are scarce but wants are infinite.

Question 2

What are the 4 resources or factors of production?

Answer 2

Land
Labour
Capital
Enterprise

Question 3

What are the definitions for each of the factors of production?

Answer 3

Land - Natural resources needed for production
Labour - Workforce with necessary skills for production
Capital - Tools machinery factories and infrastructure needed to produce goods
Enterprise - Entrepreneurs organise the factors and are willing to take risks by starting a firm.

Question 4

What are the questions associated with the Basic Economic problem?

Answer 4

What to produce? Goods and services should be produced for society by its scarce resources.

How to produce? Should the productive resources be used to produce goods and services.

For Whom? produced a range of goods and services how they should be allocated for consumption

Question 5

What is Ceteris paribus?

Answer 5

All else being equal

Question 6

What is an opportunity cost?

Answer 6

The benefit lost from the next best alternative foregone

Question 7

What is scarcity?

Answer 7

scarce in relation to the demands placed upon them.

Question 8

What is a renewable resource?

Answer 8

A renewable resource is resource of economic value that can be replenished in equal level to consumption. Like oxygen.

Question 9

What is a non renewable resources?

Answer 9

A non renewable resource is a resource of economic value that cannot be replaced to the same equal level as consumption like fossil fuels.