The basic economic problem Flashcards
wants
desires for goods and services
resources
factors used to produce goods and services
The economic problem
unlimited wants exceeding finite resources
Scarcity
a situation where there is not enough to satisfy everyone’s wants
Economic good
a product that requires resources to produce and therefore has an opportunity cost
Free good
a product which does not require any resources to make it and so does not have an opportunity cost
Capital goods
human-made goods used in production
Consumer goods
goods and services purchased by households for their satisfaction
Entrepreneur
a person who bears the risks and makes the key decisions in a business
Occupationally mobile
capable of changing the use
Geographically mobile
capable of moving from one location to another location
Labour force
people in work and those actively seeking work
Productivity
the output per factor of production in an hour
Opportunity cost
the next best alternative forgone while making an economic decision
Production possibility curve
a curve that shows the maximum output of two types of products and a combination of those products that can be produced with existing resources and technology
