The Economic Problem Flashcards
0
Q
What is the economic problem?
A
The problem of scarcity that arises from infinite wants and finite resources.
1
Q
What is a market mechanism?
A
A way of deciding how to allocate resources within an economy.
2
Q
Define opportunity cost.
A
The next best alternative forgone when making a choice.
e.g. If you had £1 and spent it on crisps the opportunity cost would the next best thing you could have dome with that £1.
3
Q
Identify the four factors of production
A
Land
Labour
Capital
Entrepreneurship
4
Q
Describe what a production possibility curve shows.
A
The combinations of two goods that can be produced whilst using all available resources efficiently.
