CHAPTER 3 THE ECONOMIC PROBLEM Flashcards

1
Q

Basic economic problem

A

Resources have to be allocated between competing uses because wants are infinite whilst resources are scarce.

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2
Q

Capital

A

As a factor of production is the stock of manufactured resources used in the production of goods and services.

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3
Q

Choice

A

Economic choices involve the alternative uses of scarce resources.

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4
Q

Economic goods

A

Goods that are scarce because their use has an opportunity cost.

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5
Q

Entrepreneurs

A

Individuals who seek out profitable opportunities for production and take risks in attempting to exploit these.

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6
Q

Enterprise or entrepreneurship

A

As a factor of production is the seeking out of profitable opportunities for production and taking risks in attempting to exploit these.

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7
Q

Factors of production

A

The inputs to the production process: land, labour, capital and enterprise or entrepreneurship.

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8
Q

Fixed capital

A

Economic resources such as factories and hospitals which are used to transform working capitals into goods and services.

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9
Q

Free goods

A

Goods that are unlimited in supply and which therefore have no opportunity cost.

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10
Q

Human capital

A

The value of the productive potential of an individual or group or workers; it is made up of the skills, talents , education and training of an individual or group and represents the value of future earnings and production.

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11
Q

Labour

A

As a factor of production is the workforce.

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12
Q

Land

A

As a factor of production , is all natural resources.

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13
Q

Needs

A

The minimum this is necessary for a person to survive as a human being.

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14
Q

Non-renewable resources

A

Resources, such as coal or oil , which once exploited cannot be replaced.

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15
Q

Non- sustainable resource

A

A resource which an be economically exploited in such a way that its stock is being reduced over time.

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16
Q

Opportunity cost

A

The benefits forgone of the next best alternative.

17
Q

Renewable resources

A

Resources, such as fish stocks or forests, that can be exploited over and over again because they have the potential to renew themselves.

18
Q

Scarce resources

A

Resources that are limited in supply so that choices have to be made about their use

19
Q

Sustainable resources

A

renewable resources that is being economically exploited in such a way that it will not diminish or run out.

20
Q

Wants

A

Desires for the consumption of goods and services.

21
Q

Working or circulating capital.

A

Resources that are in the production system waiting to be transformed into good or other materials before being finally sold to the consumer.