Chapter 1: The Nature of the Economic Problem

Question 1

What stops people from enjoying all the products they would like to have?

Answer 1

A lack of resources to produce them

Question 2

What are resources?

Answer 2

They are factors used to produce goods and service

Question 3

What is the economic problem?

Answer 3

It is when unlimited wants exceed the finite resources

Question 4

What causes the economic problem?

Answer 4

Scarcity

Question 5

What is scarcity?

Answer 5

It is a situation where there is not enough to satisfy everyone’s wants

Question 6

State whether each option is finite or infinite:

a)Wants

b)Resources

Answer 6

a) Infinite

b)Finite

Question 7

What is an economic good?

Answer 7

It is a product that requires resources to produce it

Question 8

What is a free good?

Answer 8

It is a product that does not take any resources to make it

Question 9

Do economic goods have an opportunity cost?

Answer 9

Yes

Question 10

Do free goods have an opportunity cost?

Answer 10

No

Question 11

State whether each of the following is an economic good or a free good:
a) Water from a river
b)Carpets
c)Newspaper
d)Bottled water
e)Sunshine
f)Chocolate bar

Answer 11

a)Free good
b)Economic good
c)Economic good
d)Economic good
e)Free good
f)Economic good

(Tip: Pay attention to what the product is to know what kind of good it is. For example, in a and d, both goods are water. However, the water in a is a gift of nature, making it a free good while the water in d has been processed for drinking, so it is an economic good.)