3.1.1 relative scarcity, PPF, 3 basic eco questions Flashcards
what is the basic economic problem
peoples needs and wants are infinite or unlimited whilst resources are limited. as a nation we would like to produce far more than possible.
what are the four main groups expressing their needs and wants for Australian goods and services
- overseas needs and wants
- households needs and wants
- government needs and wants
- private business needs and wants
define relative scarcity
relative scarcity refers to the fact that the needs and wants of societies are larger than the resources available to satisfy those needs and wants.
define needs
the necessities which we require for survival
define wants
refers to items which are not necessary for survival
define resources (factors of production)
are the productive inputs required to make any good or service
define natural resources
gifts of nature
define labour resources
human skills and talents used to produce.
define capital resources
the physical plant and equipment used to produce goods and services
define oppurtunity cost
the next best alternative foregone when choosing to produce
what are some ways a country could sustainable increase their productive capacity
- education and training for workers
-new technology being implemented
-discovery of new resources
what are the three economic questions
what and how much to produce
how to produce
for whom to produce
explain the first of the three economic questions
what and how much to produce - relates to businesses conducting research into the market to discover the demand for specific goods or services they wish to produce and the correct amount to produce to limit waste.
explain the second of the three economic questions
how to produce -
refers to the combination of labour and/or machinery to produce.
explain the last of the three economic questions
for whom to produce -
who is the target market? what do they want out of the product and what are they willing to pay?
