General terms and definitions Flashcards
Define Needs
Things individuals must have satisfied in order to sustain life.
What happens if needs are not met?
You may die.
What are Wants?
Desires individuals would like to have satisfied but are not necessary to sustain life. Wants are unlimited.
What is Scarcity?
Scarcity is limited resources relative to wants.
What is Choice?
Choice is a decision made between alternatives.
What is Opportunity cost?
It’s the next best alternative FOREGONE when a decision is made. (The second ranked alternative given up when a choice is made)
What is Economics?
The study of solving the problem of to allocate scarce resources that have alternative uses so on to maximise satisfaction of consumers needs and wants.
What is needed for economics?
Scarcity/limited resources and unlimited wants.
What are economic decisions?
What to produce? what resources are to be used and how they are provided.
What are our needs?
Food, water, shelter, clothing.
What are our limited means?
Time.
Skill.
Money.
Family.
