the economic probelm

Question 1

What is a free good

Answer 1

a good which has no opp cost since there is no scarcity of the good

Question 2

What is an economic good

Answer 2

a good which has an opp cost and suffers from problem of scarcity

Question 3

What is scarcity

Answer 3

the shortage of resources in relation to quantity of human wants

Question 4

what is the economic problem

Answer 4

That choices have to be made in order to optimally allocative and use resources do to them being scarce as people have unlimited wants and needs however there are limited resources available

Question 5

what are the three economic agents

Answer 5

firms
govt
households

Question 6

Who aims to maximise profits

Answer 6

firms

Question 7

who aims to maximise their utility

Answer 7

Households

Question 8

who acts on behalf of households

Answer 8

govt

Question 9

what is rationality

Answer 9

choosing the option which best benefits oneself

Question 10

what can lead to irrational behaviour

Answer 10

desire for instant reward
emotion over logic
pursing self interest