3. Scarcity

Question 1

Scarcity

Answer 1

When the demand for a good or service is greater than the availability of the good or service.

Question 2

What is the economic problem?

Answer 2

resources have to be allocated between competing uses because wants are infinite but resources are scarce.

Question 3

3 questions to ask to allocate resources

Answer 3

What goods and services should an economy produce?
How should goods and services be produced?
Who should get the goods and services produced? – even distribution? more for the rich? for those who work hard?

Question 4

NEEDS:

Answer 4

are the basic necessities that a person must have in order to survive

Question 5

WANTS:

Answer 5

are the desire that people have

Question 6

Factors of production

Answer 6

Land
Labor
Capital
Enterprise (Entrepreneurship)

Question 7

Land

Answer 7

natural resources available for production

	- renewable resources: those that replenish
	- non-renewable resources: cannot be replaced

Question 8

labour

Answer 8

• physical and mental effort of people used in production

Question 9

capital

Answer 9

• all non-natural (manufactured) resources that are used in the creation and production of other products

Question 10

enterprise

Answer 10

• refers to the management, organization and planning of the other three factors of production

Question 11

opportunity cost

Answer 11

the benefits of the next best alternative that are given up.

Question 12

choice

Answer 12

They have to decide how to allocate their limited financial resources and so always need to choose between alternatives.
People wants are infinite; resources are finite, therefore, choices must be made.

Question 13

free good

Answer 13

Does not incur any opportunity costs in its production or when consumed
Not relatively scarce (not limited in supply)
Will not have a price

Question 14

economic good

Answer 14

Has an opportunity cost (goods that use resources which could have been put to use producing something else)

Uses scarce resources

Will have a price

Question 15

Consumer goods

Answer 15

products sold to general public

Question 16

consumer durable goods:

Answer 16

products that last a long time and can be used repeatedly

Question 17

non-durable goods:

Answer 17

products that need to be consumed very shortly after purchase

Question 18

Capital goods or Producer goods –

Answer 18

products purchased by other businesses to produce other goods and services
e.g. computers, machinery, tools

Question 19

Services –

Answer 19

intangible products provided by businesses

e.g. teachers (education), doctors (health care)

Question 20

non-renewable

Answer 20

resources resources, such as coal or oil, which once exploited cannot be replaced.

Question 21

non-sustainable

Answer 21

resource a resource which that can be economically exploited in such as a way that its stock is being reduced over time. opportunity cost the benefits

Question 22

renewable resources

Answer 22

resources, such as fish stocks or forests, that can be exploited over and over again because they have the potential to renew themselves.

Question 23

scarce resources

Answer 23

resources that are limited in supply so that choices have to be made about their use.

Question 24

working or circulating capital

Answer 24

resources that are in the production system waiting to be transformed into goods or other materials before being finally sold to the consumer.