CH 01: The Study Field of Economics Flashcards
After you have worked through the learning unit, you should be able to • explain the economic problem of scarcity • explain the meaning of unlimited needs and wants and scarce resources • distinguish between scarce goods and free goods • explain the three fundamental questions • describe and distinguish between the factors of production and give examples of each • explain the concept opportunity cost
1
Q
What is economics?
A
Economics is the study of how people use their limited resources to try to satisfy unlimited want
2
Q
What is the economic problem?
A
The resources that we have available for the production of goods and services are limited, while our needs and wants for goods and services are unlimited.
3
Q
What are the three fundamental questions?
A
What to produce, how to produce and for whom to produce.
4
Q
What is oppurtunity cost?
A
whenever a choice is made, it involves a cost that is known as the opportunity cost of the choice. Opportunity cost is the value to the decision maker of the best alternative that is given up.
