Scarcity, choice and the allocation of resources: Flashcards
1
Q
What does the basic economic problem relate to?
A
Scarcity
2
Q
Fundamental Economic problem?
A
Unlimited wants, limited resources
3
Q
What are choices made over?
A
What to produce and in what quantity:
How to produce good?
Who to produce the good for?
4
Q
Opportunity cost?
A
The cost of giving up the next best alternative
5
Q
Economic good?
A
A good that has an opportunity cost in consumption as it uses up scarce resources
6
Q
Free good?
A
A good that does not have an opportunity cost in consumption as it does not use up scarce resources
7
Q
Who makes the decision in a free market or capitalist economy?
A
Solely by the interaction of consumers and firms
8
Q
Who makes the decision in a command or centrally planned economy?
A
Solely by the planning department of governments
