Th Economic Problem

Question 1

which 3 questions does the study of economics seek to answer?

Answer 1

1. what goods and services should be produced to meet consumer needs?
2. how should they be produced, and who should produce them?
3. who should receive goods and services?

Question 2

what does scarcity mean?

Answer 2

insufficiency or shortness of supply

Question 3

what is a renewable resource?

Answer 3

a renewable resource is a resource that can be replenished naturally over time

Question 4

what is a non-renewable?

Answer 4

non-renewable energy is defined as energy collected from resources that cannot be replaced when they are used up

Question 5

what are examples of renewable resources?

Answer 5

• wind
• solar
• geothermal
• hydroelectric
• biomass

Question 6

what are examples of non-renewable

Answer 6

• oil
• natural gas
• coal

Question 7

what are the 4 factors of production?

Answer 7

• capital
• entrepreneurship
• land
• labour

Question 8

what are the rewards for each factor of production?

Answer 8

• land - rent
• capital - interest
• labour - wages
• entrepreneurship

Question 9

why do opportunity costs exists?

Answer 9

because of scarcity, every time we do one thing we necessarily have to forgo doing something else desirable

Question 10

give an example of an opportunity cost for a consumer

Answer 10

a consumer may have £20 to spend on a new shirt or a new pen

Question 11

give an example of an opportunity cost for a firm

Answer 11

an opportunity cost is the value of the option not taken when a business makes a decision

Question 12

give an example of an opportunity cost for a government

Answer 12

if they decide to build a new school, the opportunity cost would be the new hospital they could have built