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 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 given up when a choice is made)
Define Economics
The study of solving the problem of how to allocate SCARCE RESOURCES that have alternative uses so as to maximise satisfaction of consumers NEEDS and WANTS.
What is needed for economics.
You need to have scarcity/limited resources AND unlimited wants.
What are the economic decision.
The first economic decision is what to produce.
- what resources are to be used.
- How they are to be produced.
- and who is gonna get it.
What are our needs?
Our needs are food, water, shelter and clothing.
What are our limited means?
- Time.
- Skill.
- Money.
- Family.
What are the two differences between needs + wants
Needs are required to sustain life - wants are not.
Wants are unlimited.
Means
Our limited resources we have to satisfy our needs + wants -money, time, skill and family.
