General terms and defintitions Flashcards
Define Economics!
Economics is the study of solving the problem of how to allocate SCARCE RECOURSES that have alternate uses so as to maximise SATISFACTION of consumers NEEDS and WANTS.
What conditions are needed for economics?
For economics to happen there must be scarcity/limited recourses.
What economic decisions are needed?
What to produce
What recourses are to be used
How recourses are produced
Who gets the goods.
What is needs?
Things individuals must have satisfied in order to sustain life.
What happens if 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 is limited means/scarcity?
The condition of limited recourses 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 when a choice is made)
What are our needs
Food, water, shelter, clothes
What are luxury goods?
Are goods we want to have to make life better- but not essential for our needs
What are basic goods
Are goods that are essential for our eeds
What are our limited means?
Time
Money
Skill
Family
