7.2 Flashcards
What is the basic economic problem?
We have unlimited needs and wants, but limited resources to satisfy them.
Why is it called the basic economic problem?
It always exists, and it exists in all economiews.
What are needs?
Items that people must have in order to survive.
E.g. Food, Water and Clothing.
What are wants?
A wish or desire for something that will make life more enjoyable for a person. They are not necessary for survival.
E.g. Jewellery, computer and electricity.
What is an example of resources being combined to produce a good?
To bake a loaf of bread, flour, water and salt (Land), an oven (Capital) and a baker (Labour).
What is opportunity cost?
The alternative that is given up when making a choice.
What is resource allocation?
Making decisions about how resources will be used.
What is an economic system?
The way the production and distrubution of goods and services are organised.
What questions must economic systems anser?
What to produce?
How to produce?
For whom to produce?
What to produce?
Businesses will produce the goods and services that consumers want or need.
How to produce?
Businesses aim to make profit. Every business will attempt to make its products using the cheapest method.
For whom to produce?
High income earners will be able to buy more goods and services.
What economc system does Australia use?
Market capitalist economy.
What is a market?
The exchange of goods and services between buyers and sellers.
What are some types of markets?
Physical markets, Virtual markets, Labour markets, Property market and Stock markets.
