1.2 The basic economic problem

Question 1

What does the term ‘scare resources’ mean?

Answer 1

When there is am insufficient amount of something to satisfy all wants.

Question 2

What does the term ‘unlimited wants’ mean?

Answer 2

The infinite desire of goods or services consumers would like to have.

Question 3

What does the term ‘wants’ mean?

Answer 3

Unlimited and include anything a consumer would like, whether or not they have the resources to purchase it, e.g. the latest electronic gadget.

Question 4

What does the term ‘needs’ mean?

Answer 4

Limited only what is needed to survive, e.g. water, food & shelter.

Question 5

What is the basic economic problem?

Answer 5

How to best use scarce resources to satisfy the unlimited wants of people.

Question 6

What should be considered on how should resources be allocated?

Answer 6

1. What should be produced (e.g. consumer goods, machinery, defence weapons or hospitals).
2. How should it be produced (e.g. latest technology or skilled craftspeople).
3. Whom should it be produced for (e.g. those with the most money or special needs).

Question 7

What does the term ‘opportunity cost’ mean?

Answer 7

The next best alternative given up when making a choice, e.g. with 50p, a banana is the opportunity cost that is given up for an apple.

Question 8

What does the term ‘economic choice’ mean and the name of the three key area of impact considered?

Answer 8

An option for the user of selected scarce resources.

Economic, social and environmental sustainability

Question 9

What does the term ‘economic sustainability’ mean?

Answer 9

The best use of resources in order to create growth or development for a country, firm or individual, both now and into the future.

Question 10

What does the term ‘social sustainability’ mean?

Answer 10

The impact of development or growth that promotes an improvement in quality of life for all, now and into the future.

Question 11

What does the term ‘environmental sustainability’ mean?

Answer 11

The impact of development or growth where the effect on the natural world is small and possible to manage, now and into the future.

Question 12

Difference between renewable and non-renewable resources?

Answer 12

Renewable resources - Can be replaced as long as they are not overused

Non-renewable resources - Cannot be be replaced once they are used