Economics - The Basic Economic Problem

Question 1

Scarcity

Answer 1

Scarcity is were humans wants are unlimited but producers have limited resources and therefore can’t produce all the wants of their customers.

Question 2

Goods

Answer 2

Goods are objects and things you can touch.

Question 3

Service

Answer 3

Something you cannot touch and when someone does something for you for money.

Question 4

Land

Answer 4

Natural resources

Question 5

Labour

Answer 5

Human effort in a business. Human resources

Question 6

Capital

Answer 6

Man-made goods to produce other goods and services

Question 7

Enterprise

Answer 7

The entrepreneur who combines land, labour and capital together to run a business to meet our needs and wants.

Question 8

The Factors of Production

Answer 8

The factors of production are land, labour, capital and enterprise. Various resources which contribute to the producing of goods and services.

Question 9

Wants

Answer 9

Wants are something that you desire but you do not have to have them to survive. They are extras to spice up your life. eg phone, car, laptop

Question 10

Needs

Answer 10

Needs are something that you must have and are very important to live and survive. eg water, heat, shelter

Question 11

Durable

Answer 11

Something that lasts a long time.

Question 12

Non-durable

Answer 12

Something that lasts a short period of time. Something that can only be used once or twice.

Question 13

Consumer goods

Answer 13

Goods bought and used by consumers rather than by manufacturers for producing other goods.

Question 14

Opportunity Cost

Answer 14

The loss of the best alternative when one thing is chosen.

Question 15

Merit Goods

Answer 15

A service, such as education, that is regarded by society or government as deserving public finance. eg education, fire department, police.

Question 16

Public Goods

Answer 16

A service that is provided without any profit intake by society, a private industry or government. eg charity.

Question 17

Capital Goods

Answer 17

Goods that are used in producing other goods and services, rather than being bought by consumers. eg ladders, warehouses, machines.

Question 18

Assumptions

Answer 18

In economics, we assume that individuals, firms and governments (economic agents) are rationale. Individuals will make decisions that maximise their satisfaction. Firms will make decisions to maximise profits. Governments will make decisions that maximise the welfare of the citizens of their country.

Question 19

Sectors of industry

Answer 19

Primary, Secondary and Tertiary

Question 20

Primary

Answer 20

The extraction of raw materials. eg farming, oil drilling, mining.

Question 21

Secondary

Answer 21

The manufacturing, building or construction of raw materials. eg cars, furniture, houses.

Question 22

Tertiary

Answer 22

Services. eg banking, hairdressing.

Question 23

Production Possibility Curve

Answer 23

When resources are used to full production efficiently they will be on the curve. Inside the curve is a lack of use of your resources. Points outside the curve are not achievable at the moment.