Scarcity And Choice Flashcards
What is economics?
Economics is the study of how people, businesses and governments who have limited resources (for example money), make choices and decisions to meet their needs.
What are economic resources?
Economic resources are the factors (things) used to produce and distribute goods and services to businesses and people.
What is a need? Give three examples?
A need is something you cannot live without. E.g. Clothes, food, water.
What is a want? Give 3 examples?
A want is anything that we would like to have but we do not need to survive e.g a holiday, a trip to the cinema
What is opportunity cost?
An opportunity cost is the item you do not buy in order to buy another item.
What is the financial cost?
The financial cost is the price of the item you choose to buy.
What are the factors of production? List them?
The Factors of Production are the economic resources needed to produce goods and services. They are land, labour, capital and enterprise.
What is land?
Land - anything provided by nature to produce goods & services e.g fields, forests.
What is labour?
Labour - these are the people involved in producing a good or service (workers / employees) e.g teachers, factory workers.
What is capital?
Capital - this refers to the physical items used in making goods and services e.g machinery, computers.
What is enterprise?
Enterprise - this factor of production brings land, labour and capital together to produce a product or service e.g Steve Jobs, Mark Zuckerberg. It is the ‘idea’ behind a good or service. An entrepreneur takes a personal and financial risk in making their idea a reality.
List the four rewards of the factors of production?
Land: Reward = Rent
Labour: Reward = Wages
Capital: Reward = Interest
Enterprise: Reward = Profit
Give an example of the factor of production land in a business?
Land: Cow’s that produce the milk graze on the land while sugar, beet and fruit are grown to make flavourings for ice-cream.
Give an example of the factor of production labour in a business?
Labour: Ben and Jerry’s employ staff to produce ice-cream.
Give an example of the factor of production capital in a business?
Capital:Machinery and equipment are required to make the ice-cream, while delivery vans are needed to deliver it to the shops.
