General Terms and Definitions Flashcards
Define Economics?
Economics is the study of how to allocate SCARCE RESOURCES that have alternative uses so as to maximise SATISTFACTION of consumers NEEDS and WANTS.
What conditions are needed for Economics?
For Economics to happen there must be
scarcity / limited resources and UNLIMITED WANTS.
What Economic decisions are needed?
Economics involves decisions as to
WHAT to produce
WHAT resources are to be used and HOW they are produced
WHO is to get the goods
What is Needs?
Things individuals must have satisfied in order to SUSTAIN LIFE.
What happens if Needs are not met?
If your needs are not met, Longterm- You will die
What are Wants?
Desires individuals would like to have satisfied but are not necessary to SUSTAIN LIFE. Wants are unlimited.
What is Limited Means (Scarcity)?
The condition of limited resources relative to wants.
What is Choice?
A decision between alternatives.
What is Opportunity Cost?
The next best alternative FOREGONE when a decision is made.
What are our needs?
Food, Water, Shelter and Clothing
What are Luxury Goods?
They are goods we want to have to make life more enjoyable but are not essential for our needs.
What are Basic Goods?
They are goods that are essential for our needs.
What are our limited means?
Time, Money, Skill, Family
What are the differences between needs and wants?
Needs are needed to sustain life whereas wants are not. Needs are also limited whereas wants are unlimited.
