Lesson 2: The Economic Problem

Question 1

What is scarcity?

Answer 1

It means that economic agents such as individuals, firms, governments and international agencies, can only obtain a limited amount of resources at any moment in time.
E.g a firm might want to build a new factory but not jags the resources to be able to do so

Question 2

What are resources which are scarce called?

Answer 2

Economics goods

Question 3

What are resources which are not scarce called?

Answer 3

Free goods

Question 4

Infinite wants

Answer 4

Every humans being wants are unlimited. Everybody wants something more whether that is money, love, justice etc

Question 5

What is opportunity cost of the choice

Answer 5

Essentially, it is when you give up one opportunities for another . For example the opportunity cost of studying economics a level is studying history a level.

Question 6

Free goods x opportunity cost

Answer 6

Free goods don’t have any opportunity costs. No resources need to be sacrificed when someone says breathe air or swim in the sea.

Question 7

What is an economy ?

Answer 7

An economy is a system that attempts to solve the basic economic problems. There are household economy, the local economy, the national economy and the international economy.

Question 8

3 parts of economics problem?

Answer 8

What, how, for whom
What is to be produced?
How is production to be organised?
For whom is production for?

Question 9

What are the factors of production?

Answer 9

Land, labour, human capital, non renewable resources , renewable resources, sustainable resources, non sustainable resources.

Question 10

Basic economic problem

Answer 10

Resources have to be allocated between competing uses because wants are infinite whilst resources are scarce