General Terms and Definitions Flashcards
Define Economics
The study of the problem of how to allocate SCARCE RESOURCES that have alternative uses, so as to maximise SATISFACTION of consumers NEEDS and WANTS
What conditions are needed for Economics
Scarcity/limited resources and unlimited wants
What Economic decisions are needed
What to Produce
What resources are to be used
How they are to be produced
Who is to get the goods
What are Needs
Things individuals must have satisfied in order to sustain life
What happens when needs are not met
long term-you will die
What are Wants
Desires individuals would like to have satisfied but are not necessary to sustain life
Wants are unlimited
What are Limited Means/Scarcity
The condition of limited resources relative to wants.
What is Choice
A decision made between alternatives
What is Opportunity Cost
The next best alternative FOREGONE when a decision is made(the second ranked alternative given up if a decision was made
What are our needs
Food,water,shelter and clothing
What are Luxury Goods
They are goods that we want to have to make life better but 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,skills,family
What are the two differences between wants+needs
Needs are needed to sustain life whereas wants are not. Needs are limited whereas wants are unlimited.
