The economic problem

Question 1

What is the basic economic problem

Answer 1

The idea that there are infinite wants but there are limited resources, so we have to decide how resources will be allocated

Question 2

What are the questions asked due to the economic problems

Answer 2

1) what to produce and how much to produce?
2)How should goods and services be produced
3)how should the goods produced be allocated?

Question 3

What are the four factors of production

Answer 3

Land- any natural resources used
Labour- human effort used
Capital- man made aids to production
Enterprise- brings other factors of production together and takes risks

Question 4

what is a renewable resources

Answer 4

A resource that can naturally be replaced at a faster rate than it is used up

Question 5

what is a non-renewable resource

Answer 5

A resource where it is consumed at a faster rate than it is replaced

Question 6

what is an economic good

Answer 6

-economic goods are created from resources that are limited in supply and so are scarce.
-they therefore have a price

Question 7

what is a free good

Answer 7

-free goods are unlimited in supply, such as sunlight or air.
-consumption by one person does not limit consumption by others
-the opportunity cost of consuming is 0