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
Wants are desires individuals would like to have satisfied but are not necessary to sustain life. Wants are unlimited
What is scarcity
Limited resources relative to our unlimited wants
What is choice
A decision made between alternatives
What is opportunity cost
it is the next best alternative FORGONE when a decision is made ( the second ranked alternative when given up when a choice is made )
Define economics
The study of solving the problems of how to allocate scarce resources that have alternative uses so as to maximise satisfaction of consumes needs and wants.
What is needed for economics
you need to have scarcity/limited resources and unlimited wants
What are the economic decisions
What to produce
What resources are to be used
and how they are provided
who is to get the goods
What are our needs
Our needs are food,water,shelter and clothing
What are our limited means
Our limited means are time.skill,money and family
What are the differences between needs and wants
Needs are required to sustain life-wants are not
wants are unlimited-needs are not
Means
Our limited resource we have to satisfy our needs and wants
What are positive goods
positive goods are beneficial to land e.g. fresh air,medicine
What are negative goods
Negative goods are a cost to society e.g. waste products that pollute rivers so the water cannot be used for dining or water sports
What is the payment for land?
rent
What is the payment for capital?
the payment for capital is interests
What is the payment for labour?
the payment for labour is wages
What is the payment for entrepreneurship
the payment for entrepreneurship is profit
