1.1.3 The economic problem

Question 1

Describe the difference between Needs and Wants

Answer 1

Needs are limited and people know that they must be satisfied if they want to survive. Whereas, Wants are unlimited or infinite and everyone will always want more of but dont actually require them to survive.

Question 2

Define a Free Good

Answer 2

Resources which are not scarce in quantity.

Question 3

Define a Economic Good

Answer 3

Resources which are scarce in quantity.

Question 4

Define the Basic Economic Problem

Answer 4

This is where resources are scarce but wants are infinite. In economics, we study how we can manage the allocation of these resources.

Question 5

Define the concept of Opportunity Cost

Answer 5

This is the benefit lost from the next best alternative.

Question 6

An economy is a system which attempts to solve…

Answer 6

the basic economic problem of opportunity cost

Question 7

Define the 4 factors of production

Answer 7

Land - Natural resources available for production
Labour - The human input into the production process
Enterprise - Entrepreneurs organise factors of production and take risks.