chapter 1.1: The basic economic problem key words

Question 1

Basic economic problem

Answer 1

The question of how best to allocate scarce resources in order to satisfy people’s unlimited wants and needs

Question 2

Public sector

Answer 2

Economic activity directly involving the government, such as the provision of state education and healthcare services.

Question 3

Private sector

Answer 3

refers to the part of the economy that is owned and operated by individuals or private companies, rather than the government.

e.g shops, factories, and services.

Question 4

Services

Answer 4

Intangible products or tasks provided to meet the needs of consumers
e.g banking, haircuts and internet access

Question 5

Free goods

Answer 5

Goods which are unlimited by supply, such as air and seawater.

No opportunity cost in terms of output as no resources are used to produce.

Question 6

Economic goods

Answer 6

Goods which are limited in supply.

Question 7

Three main economic agents or decision makers

Answer 7

-Households/firms
-Firms and businesses which operate in the private sector
-Government

Question 8

Three main questions addressed by economic agents

Answer 8

-What to produce
-How to produce it
-For whom to produce it