The basic economic problem

Question 1

Define the economic problem

Answer 1

How to best use limited resources to satisfy the unlimited wants of people.

Question 2

Define unlimited wants

Answer 2

The infinite desire for something.

Question 3

Define scarce resources

Answer 3

When there is an insufficient amount of something to satisfy all wants.

Question 4

Define opportunity cost

Answer 4

The next best alternative given up when making a choice.

Question 5

Define economic choice

Answer 5

An option for the use of selected scarce resources.

Question 6

Define economic sustainability

Answer 6

The best use of resources in order to create responsible development or growth, now and into the future.

Question 7

Define social sustainability

Answer 7

The impact of development or growth that promotes an improvement in quality of life for all, now and into the future.

Question 8

Define environmental sustainability

Answer 8

The impact of development or growth where the effect on the environment is small and possible to manage, now and into the future.

Question 9

How is the economic problem, unlimited wants and scarce resources linked?

Answer 9

The economic problem is that there are unlimited wants for goods and services but there are only scarce resources to make them.

Question 10

What are the factors of opportunity cost?

Answer 10

• Once a decision is made on a use for scarce resources, then other options for their use are sacrificed
• It covers the missed benefits that the other options may have given to consumers
• It can be used to compare what could have been gained from different uses of resources
• It can help decide which goods and services should be produced

Question 11

How are economic choices chosen?

Answer 11

• If the benefits of a good are greater than its costs, then this would suggest that more should be made so society can benefit (and vice versa)
• Economists consider the direct costs and benefits of different economic choices for consumers and producers
• They also consider the side effects of goods and services that can impact society beyond the consumers and producers

Question 12

What does economic sustainability mean?

Answer 12

Decisions are made that make financial sense for now and the future.

Question 13

Example of economic benefits

Answer 13

• Potential sales/profits overtime
• Any financial benefits that result from the economic choice, such as spending on research that can lead to more innovative products that could lead to future sales.

Question 14

Examples of economic costs

Answer 14

• cost of production, such as raw materials
• the price of the good that consumers pay
• other reduced costs due to the economic choice, such as a choice that reduces unemployment and therefore benefits payments

Question 15

What does social sustainability mean?

Answer 15

Decisions are made that improve a society’s quality of life an well-being.

Question 16

Why is social sustainability good?

Answer 16

A happier society may lead to a more productive economy overtime.

Question 17

What does social sustainability encourage?

Answer 17

Fairness and a better society with respect for others and their quality of life (e.g. the impact of an economic choice regarding transport provisions considered access to leisure and services for groups in society, such as elderly)

Question 18

What does environmental sustainability mean?

Answer 18

Means that our environment is protected so that earth can support humans and trade now and in the future.

Question 19

Impacts of environmental sustainability

Answer 19

• use of renewable resources
  (e.g. wood from managed forests) can mean a continued source of raw material
• use of non-renewable resources (fossil fuels) would lead to more difficult production in the future
• use of non-renewable resources may result in pollution and climate change

Question 20

Can multiple types of sustainability be achieved at once?

Answer 20

Yes. For example, subsiding renewable energy may have a positive impact on the environment as well as economic benefits due to job creation.

Question 21

What is the aim of sustainability?

Answer 21

Sustainability looks at the costs and benefits of economic choices both now and in the future. This enables economic decisions that can prioritise the use of scarce resource and help improve quality of life now without reducing it for future generations