Chapter 2 - The Economic Problem Flashcards
Define - “Economic Goods”
Goods that are scarce because their use has an opportunity cost.
Define - “Free Goods”
Goods that are unlimited in supply and therefore have no opportunity cost.
Define - “Opportunity cost”
The benefits of the next best alternative that are given up.
Name four factors of production
The four factors of Production are : land, labour, capital and enterprise
Define - “Needs”
The minimum that is necessary for a person to survive as a human being.
Define - “Wants”
The desires for the consumption of goods and services.
Define - “Non-renewable resources”
Resources which once exploited cannot be replaced
Define - “Non-sustainable resources”
Resources which can be economically exploited in such a way that its stock will be reduced over time.
Define - “Renewable resources”
Resources that can be exploited over and over again because they have the potential to renew themselves.
What does “Land” as a factor of production mean?
All natural resources (ground, air, sea) and the land itself
What does “Labour” as a factor of production mean?
The workforce
What does “Capital” as a factor of production mean?
The stock of manufactured resources used in the production of goods and services
Define - “Human Capital”
The value of the productive potential of an individual, or a group of workers. Made up of skills, talents, education and training.
What does “Enterprise” as a factor of production mean?
It is the seeking out of profitable opportunities for production and taking risks.
