The Basic Economic Problem Flashcards
What is the nature of the economic problem?
In every country, resources are limited in supply and seclusion have to be made by governments, firms and individuals about how to allocate scarce resources to satisfy unlimited needs
What is the basic economic problem?
•How to allocate scarce resources to satisfy unlimited needs and wants
What is an economic good?
An economic good is a good that is limited in supply.
For Example: oil. wheat. cotton. housing
What are free goods?
Free food a are good that are unlimited in supply.
For example air. sea. rainwater. sunlight.
What the the 3 basic economic questions?
1 what to produce
2 how to produce it
3 for whom to produce it
Who produces goods and services in the private sector?
Firms and Individuals produce goods and services in the private sector.
Who produces goods and services in the private sector?
The government produces goods and services in the private sector b
What are needs and wants?
Needs are good that you cannot live without.
Wants are goods that you don’t need but you can live without.
What are the 4 factors of production?
Explain them.
Land: gifts of nature, not created by human effort
Capital: tools, equipment and factories used to produce goods and services
Labour: people with all their efforts, abilities and skills
Entrepreneurs: people who take risks in search of profit; they start new business or bring new products to the market
What is Land?
Land represents all natural resources, such as timber and gold, used to produce a good.
What is labour?
Labour is all the work labours or workers perform at all levels of an organisation except for the entrepreneur.
What is an entrepreneur?
The entrepreneur is the individual takes an idea and attempts to make an economic profit by combining all the other factors of production. The entrepreneur also takes on all the risks and rewards of the business.
What is capital?
Capital is all the tools and machinery used to produce a good or service.
What is Opportunity Cost?
Opportunity Cost is the cost of the next best opportunity forgone when making a decision.
What are the different sectors of the economy.
Explain them:
Primary Sector: are activities undertaken by directly using natural resources.
Secondary Sector: It covers in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activities.
Tertiary Sector: These are activities that help in the development of the primary and secondary sector. These activities by themselves do not produce goods but they are an aid and support to the production process
