4.1.1.4 Scarcity, choice and the allocation of resources Flashcards
1
Q
What is the basic economic problem?
A
there is unlimited wants and needs but limited resources
2
Q
What is opportunity cost?
A
the next best alternative that you give up in making a decision when there is a trade off between producing two goods
3
Q
What is an economic good?
A
goods that are finite/scarce in their use and therefore have an opportunity cost (once used cannot be used for other production purposes) e.g. metal, wood
4
Q
What is a free good?
A
goods that have no opportunity cost (they can be used for more than one use) e.g. air, water in the ocean
5
Q
What is an economic agent?
A
participants in society who decide how resources are allocated
6
Q
Scarcity
A
Scarcity means that choices have to be made about how scarce resources are allocated between different uses.
