Nature and purpose of economic activity Flashcards
What is the central purpose of economic activity?
It is the production of goods and services to satisfy needs and wants
What are the key economic decisions that should be made?
-What to produce, How to produce and who is to benefit from the good and service produced.
What is the difference between a want and a need?
A want is something you desire to increase quality of life
A need is something you as a human believe you require in order to function or survive.
Who are economic agents?
Economic agents are the individuals and firms that partake in economic activity, the demand for and supply of goods and services.
What is a free market economy?
A free market economy is where firms decide what goods and services to produce with limited intervention from the government.
How do economic incentives assist economic agents?
They provide them with the information required to tell them what goods and services to produce.
What are the 4 factors of production firms combine to produce a good or a service?
Land, Labour, Capital and enterprise.
In a free market economy we produce according to ____ and ____
Supply and demand.
