1.1.3 the economic problem

Question 1

what is the economic problem

Answer 1

needs and wants are infinite but resources are scarce and limited

Scarcity is a ​relative concept as resources are not necessarily scarce in themselves but they are ​scarce in relation to the demands placed upon them

Economies try to solve the basic economy problem by working out ​what to produce​, how to produce it​ and ​for whom production should take place

Question 2

The distinction between renewable and non-renewable resources

Answer 2

A ​renewable resource is resource of economic value that can be replenished or replaced on a level equal to consumption

A ​non-renewable resource is a resource of economic value that cannot be readily replaced by natural means on a level equal to consumption

Question 3

what is The importance of opportunity costs to economic agents (consumers, producers and government)

Answer 3

opp cost is the cost of producing one good / service in terms of the next best forgone