the basic economic problem Flashcards
wants
desires for goods and services
resources
factors of production 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 which requires resources to produce, therefore has an opportunity cost
free good
a product which does not require any resources to produce and therefore does not have an opportunity cost
capital/capital goods
human-made goods used in production
factors of production
the economic resources of land, labour, capital, enterprise
land
gifts of nature available for production
labour
human effort used in producing goods and services
enterprise
risk bearing and key decision making in a business
occupationally mobile
capable of changing use
geographically mobile
capable of moving from one location to another location
mobility of labour
the ability of labour to change where it works or in which occupation
mobility of capital
the ability to change where capital is used or in which occupation
mobility of enterprise
the ability to change where enterprise is used or in which occupation
payment for labour
wages
payment for capital
interest
payment for enterprise
profit
payment for land
rent
productivity
the output per factor of production in an hour
output
goods and services produced by the FOPs
opportunity cost
the next best alternative foregone while making an economic decision
what does ppc show
max combinations of g/s that can be produced by an economy in each period of time with its limited resources
what does x, b, y show
x= inefficiency (not all resources being used)
b= maximum efficiency (all resources being used)
y= combination that cannot be produced (lack of resources)
