The Economic Problem

Question 1

What is the basic economic problem?

Answer 1

Scarcity - Wants are unlimited and resources are finite, so choices have to be made.

Question 2

What is an opportunity cost?

Answer 2

An opportunity cost of a choice is the value of the next best alternative forgone.

Question 3

What is Capital?

Answer 3

Physical: goods which can be used in production process
Fixed: Machines; buildings
Working: Finished or semi-finished consumer quality

Question 4

What is Entrepreneurship?

Answer 4

Managerial ability. The entrepreneur is someone who takes risks, innovates, and uses the factors of production. Resources are drawn together into the production process.

Question 5

What is Land?

Answer 5

Natural resources such as oil, coal, wheat, water.

It can also be the physical space for fixed capital.

Question 6

What is Labour?

Answer 6

Human capital, which is the workforce of the economy.

Question 7

What is a commodity?

Answer 7

A commodity is a raw material such as oxygen, coal.

Question 8

Finish the sentence:

Renewable sources can be:

Answer 8

replenished.

Question 9

Finish the sentence:

Non-renewable resources cannot be:

Answer 9

renewed.