The Basic Economic Problem Flashcards
Capital
goods/materials that are used for the production of other items. Not consumed in their own right.
Consumption
Using up of goods and services
Consumer goods
goods that are wanted because they provide satisfaction to their owner.
Demerit goods
goods that are perceived to have a negative impact/effect on society/individuals.
Economy
Total value of goods & services produced & exchanged within a country.
Enterprise
risk taking & decision making in business
Factors of production
Resources that are used in the production of goods and services
Fixed capital
capital goods that do not need replacing in the short term (machinery, tools, buildings).
Free goods
Goods that need no resources to make eg air, sunlight
Economic goods
Goods that require factors of production i order to be produced
Labour
The physical and mental effort put into the production of goods and services
Land
Land is a combination of all natural resources that are used in the production of goods and services
Merit Goods
Goods that are perceived to provide positive externalities
Needs
requirements for continued existence
Opportunity cost
the benefit that could have been have gained from the next best alternative is forgone
Production possibility curve
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).
Public goods
Goods provided by the government with the use of the money the government gets through taxes.
Resources
items that are needed for the production of goods and services.
Scarcity
limited availability of resources that are not enough to satisfy the unlimited wants of consumers.
Services
Something that fulfils a need that is often not as physical want
Wants
The desires that people have that are not necessarily needed for existence
Working Capital
Capital products that are used up in the production process
