The Economic Problem Flashcards
What’s the basic economic problem?
How can available scarce resources be used to satisfy people’s infinite needs and wants as effectively as possible
What are the factors of production?
Land, Labour, Capital and Enterprise
What is land?
Non renewable resources
Renewable resources
Materials
Water
Animals
What is labour?
Work done by people.
What is the labour force?
The population available to do work
What is capital?
Equipment, Factories and schools used to produce goods and services
What is enterprise?
The willingness to take risk to make a profit
What is economic activity?
Combining the factors of production to create outputs that people can consume.
What’s the purpose of economic activity?
To increase people’s economic welfare
What are types of economic activity?
Making of goods and services
Consumption
What are the fundamental problems of economics?
What to produce?
How to produce?
Who to produce it for?
What are the economic agents?
Producers
Consumers
Governments
What do producers do?
Firms or people that make goods and services
What do consumers do?
People or firms that buy them
What do governments do?
They decide the rules
