1.4 Scarcity, Choice And The Allocation Of Resources Flashcards
1
Q
Basic economic problem definition
A
There are Scarce economic resources compared with society’s unlimited wants
2
Q
Opportunity cost definition
A
The cost of the next best alternative sacrificed when making a choice
3
Q
Economic good definition
A
A good that has an opportunity cost in consumption because it uses up scarce resources
4
Q
Free good definition
A
A good that does not have an opportunity cost in consumption because it does not use up scarce resources
5
Q
Scarcity definition
A
The fact that people have unlimited wants but resources to meet these wants are limited. The economy can’t produce the goods and services wanted with its limited resources
6
Q
What are the key economic questions?
A
- what to produce and in what quantities
- how to produce the goods and services
- to whom should should they be allocated
