Theme 1.1.3 The economic problem (unit 3) Flashcards
Define scarcity?
Scarcity says that there is a finite supply of this resources. Almost all recourses are finite. This results in decisions having to be made about there supply.
What is an economic good?
An economic good is one that is scare because their use has an opportunity cost associated with it.
What is a free good?
A free good is one which is scarce and has no opportunity cost associated with it.
What is an economic need?
An economic need are the minimum resources that a person needs to survive and are limitless.
What is an economic want?
An economic want is the desire for the consumption of goods and services and are limitless.
What is the economic problem?
The economic problem is that peoples wants are infinite but the resources to satiate peoples needs are scarce.
What is the allocation of resources?
The allocation of recourses are the choices made by economic agents to distribute resources amongst the population.
What is an economic choice?
An economic choice is one which has a range of possible alternative scarce recourses.
Define opportunity cost.
Opportunity cost is all other lost possible benefits from alternatives that isn’t the ‘best’ choice, which would rationally get picked.
What are the factors of production?
FoP are the inputs to the production process:
Capital (the stock of manufactured recourses that are used in the production of good and resources.)
Enterprise (the seeking of profitable opportunities and subsequently taking risks to fulfil these opportunities.)
Land (all natural resources.)
Labour (the workforce.)
What is the a renewable and sustainable resource?
A good can be a renewable resource such as a forest but is only a sustainable resource if it will survive and not diminish from economic activity.
What is a non-sustainable resource?
It is a resource which is diminished due to economic exploitation.
What is human capital?
Human capital is the value of a worker which can be increased by education and training. The higher the human capital the more productive this worker.
What is Working or circulating capital?
It is resources that are in the production system waiting to be transformed into goods or about to be sold to the consumer.
Define fixed capital (capital goods).
It is an economic resource that converts working capital and FoP into goods and resources.
