1.1.3 The Economic Problem

Question 1

What does scarcity mean?

Answer 1

When people have unlimited wants, but finite resources

Question 2

What is a renewable resource?

Answer 2

A resource that won’t run out - it is unlimited

Question 3

What is a non-renewable resource?

Answer 3

A resource that is finite - it will eventually run out

Question 4

What is opportunity cost?

Answer 4

Used in decision making. The forgone aspect of something for the next best alternative

Question 5

Statement: “Will plans to eat chocolate over cake”. What is the opportunity cost for will?

Answer 5

The forgone aspect of the chocolate

Question 6

What is marginal analysis?

Answer 6

A decision making process based on the additional benefit for a consumer to use that good or service

Question 7

What are the 3 economic agents?

Answer 7

• consumers
• producers
• government

Question 8

What decisions to consumers have to take?

Answer 8

Choices about their expenditure in relation to their income

Question 9

What decisions do producers have to make?

Answer 9

The quantity of a good or service to produce and at what price to attract consumers

Question 10

What decisions do the government have to make?

Answer 10

Government spending which influences society and the economy