The Basic Economic Problem

Question 1

Capital

Answer 1

goods/materials that are used for the production of other items. Not consumed in their own right.

Question 2

Consumption

Answer 2

Using up of goods and services

Question 3

Consumer goods

Answer 3

goods that are wanted because they provide satisfaction to their owner.

Question 4

Demerit goods

Answer 4

goods that are perceived to have a negative impact/effect on society/individuals.

Question 5

Economy

Answer 5

Total value of goods & services produced & exchanged within a country.

Question 6

Enterprise

Answer 6

risk taking & decision making in business

Question 7

Factors of production

Answer 7

Resources that are used in the production of goods and services

Question 8

Fixed capital

Answer 8

capital goods that do not need replacing in the short term (machinery, tools, buildings).

Question 9

Free goods

Answer 9

Goods that need no resources to make eg air, sunlight

Question 10

Economic goods

Answer 10

Goods that require factors of production i order to be produced

Question 11

Labour

Answer 11

The physical and mental effort put into the production of goods and services

Question 12

Land

Answer 12

Land is a combination of all natural resources that are used in the production of goods and services

Question 13

Merit Goods

Answer 13

Goods that are perceived to provide positive externalities

Question 14

Needs

Answer 14

requirements for continued existence

Question 15

Opportunity cost

Answer 15

the benefit that could have been have gained from the next best alternative is forgone

Question 16

Production possibility curve

Answer 16

a curve that represents possible output if the factors of production are used efficiently. Also known as the ‘opportunity cost curve’ as it can be used to show the opportunity cost of producing different products/quantities).

Question 17

Public goods

Answer 17

Goods provided by the government with the use of the money the government gets through taxes.

Question 18

Resources

Answer 18

items that are needed for the production of goods and services.

Question 19

Scarcity

Answer 19

limited availability of resources that are not enough to satisfy the unlimited wants of consumers.

Question 20

Services

Answer 20

Something that fulfils a need that is often not as physical want

Question 21

Wants

Answer 21

The desires that people have that are not necessarily needed for existence

Question 22

Working Capital

Answer 22

Capital products that are used up in the production process