Scarcity and Choice Flashcards
Basic Economic problem
How to best allocate the scare resources among alternative uses
Resources which aren’t scarce are known as ?
Free goods
Opportunity cost
Value of the next best alternative forgone when a choice is made
Why are some PPC’s straight lines?
Factor’s of production are equally efficient in producing both goods so opportunity cost of producing one good is the same at all levels
Productivity?
Output per unit of input employed
What must economies choose?
What mix of goods to produce
For whom to produce those goods for
How production is to be organised
Primary sector
Agriculture and exploitation of natural resources
Secondary sector
Production of manufactured goods
Tertiary sector
Production of services
Specialisation
Production of a limited range of goods by an individual, firm or country
What are the benefits of specialisation?
Greater productivity
Greater quality of output
Lower costs and prices
Higher living standards
Wider consumer choice
