Economics - The Basic Economic Problem Flashcards
Scarcity
Scarcity is were humans wants are unlimited but producers have limited resources and therefore can’t produce all the wants of their customers.
Goods
Goods are objects and things you can touch.
Service
Something you cannot touch and when someone does something for you for money.
Land
Natural resources
Labour
Human effort in a business. Human resources
Capital
Man-made goods to produce other goods and services
Enterprise
The entrepreneur who combines land, labour and capital together to run a business to meet our needs and wants.
The Factors of Production
The factors of production are land, labour, capital and enterprise. Various resources which contribute to the producing of goods and services.
Wants
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
Needs
Needs are something that you must have and are very important to live and survive. eg water, heat, shelter
Durable
Something that lasts a long time.
Non-durable
Something that lasts a short period of time. Something that can only be used once or twice.
Consumer goods
Goods bought and used by consumers rather than by manufacturers for producing other goods.
Opportunity Cost
The loss of the best alternative when one thing is chosen.
Merit Goods
A service, such as education, that is regarded by society or government as deserving public finance. eg education, fire department, police.
Public Goods
A service that is provided without any profit intake by society, a private industry or government. eg charity.
Capital Goods
Goods that are used in producing other goods and services, rather than being bought by consumers. eg ladders, warehouses, machines.
Assumptions
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.
Sectors of industry
Primary, Secondary and Tertiary
Primary
The extraction of raw materials. eg farming, oil drilling, mining.
Secondary
The manufacturing, building or construction of raw materials. eg cars, furniture, houses.
Tertiary
Services. eg banking, hairdressing.
Production Possibility Curve
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.
