2ND YEAR - Scarcity And Choice

Question 1

What is economics?

Answer 1

Economics is the study of how people, businesses and governments who have limited resources (e.g money), make choices and decisions to meet their needs.

Question 2

What are economic resources?

Answer 2

Economic factors are the factors (things) used to produce and distribute goods and services to businesses and people

Question 3

Need

Answer 3

Something essential to survival e.g food, water

Question 4

Want

Answer 4

Is something we would like to have but we do not need to survive e.g a holiday, a trip to the cinema

Question 5

Opportunity Cost

Answer 5

An opportunity cost is the item you do not buy in order to buy another item

Question 6

Financial cost

Answer 6

Is the price of the item you choose to buy

Question 7

What are the factors of production?

HINT:
There’s four

Answer 7

• Land
• Labour
• Capital
• Enterprise

Question 8

Land

Answer 8

Anything provided by nature to produce goods and services e.g fields, forests

Question 9

Labour

Answer 9

These are the people involved in producing a good or service (workers / employees) e.g teachers, factory workers

Question 10

Capital

Answer 10

This refers to the physical items used in making goods and services e.g machinery, computers

Question 11

Enterprise

Answer 11

This factor of production brings land, labour and capital together to produce a product or service. It is the “idea” behind a good product or service.

Question 12

Factors of Production and Their Rewards

Answer 12

1. Land - Reward=Rent
2. Labour - Reward=Wages
3. Capital - Reward=Interest
4. Enterprise - Reward=Profit