lessons 1-4 Flashcards
1
Q
what does economics mean?
A
how infinite wants are best met with finite resources
2
Q
what is opportunity cost?
A
what you’re giving up when making a decision
3
Q
what is scarcity?
A
the lack of a finite resource
4
Q
what is the basic economic problem?
A
infinite wants, limited supply
5
Q
what is a ‘free good’
A
has no opportunity cost
doesn’t exist
6
Q
what are the 3 functions of price?
A
-rationing-high price deters consumers
-signaling-signals to producers that if there is a high price they should supply more
-incentives- if high price, producers want to produce more
