1.1.3 the economic problem

Question 1

what is the economic problem?

Answer 1

humans have infinite wants and needs but scarce resources (the problem of scarcity)

Question 2

opportunity cost (def.)

Answer 2

the benefit given up of the next best alternative (what is given up when making a choice)

Question 3

renewable resource (def.)

Answer 3

a resource that can be replenished or replaced on a level equal to consumption

examples : oxygen, solar power, fish

Question 4

non-renewable resource (def.)

Answer 4

a resource that cannot be readily replaced by natural means on a level equal to consumption

examples : fossil fuels (coal, oil and gas)

Question 5

what are the factors of production? (CELL)

Answer 5

capital : reward = interest

enterprise : reward = profit

land : reward = rent

labour : reward = wages