1.2 The Basic Economic Problem Flashcards
What is the basic economic problem?
There are unlimited wants for goods and services but there are only scarce resources to make them.
What is meant by unlimited wants?
The infinite desire for something.
What is meant by scarce resources?
When there is an insufficient amount of resources to satisfy all the wants.
What is the difference between needs and wants?
Wants are things that are desired, needs are essential for survival.
What are the 3 questions that should be considered when allocating limited resources?
1) What should be produced?
2) How should it be produced?
3) Whom should it be produced for?
What is opportunity cost?
The next best alternative given up when making a choice.
Give an example of an opportunity cost.
You are deciding whether to buy oranges or apples. You choose the oranges and leave the apples behind. The apples are the opportunity cost because it is the alternative that you gave up when making the decison.
What does economic choice mean?
An option for the use of selected scarce resources.
What is economic sustainability?
The best use of resources in order to create responsible development or growth, now and into the future.
What are some economic costs and benefits?
- Costs of production (expenses)
- Price that consumer pays
- Impact on unemployment
- Spending and tax revenue
What is meant by social sustainability?
The impact of development and growth on improving society’s quality of life and well being, now and into the future.
Evaluate some social costs and benefits.
- Fairness in society
- Local jobs
- Splitting communities
- Better standard of living
What is environmental sustainability?
How the impact of economic activity has a small effect on the environment, now and into the future.
What are some environmental costs and benefits?
- Use of renewable energy
- Scarce resources
- Pollution
- Potential climate change
