U1 AOS1 - Lesson 2 - Relative Scarcity Flashcards
Basic economic problem / Relative scarcity
Basic economic problem is that we have unlimited needs and wants, however, only limited resources to satisfy these needs and wants.
Our resources (natural, labour and capital) are limited relative to our unlimited needs and wants.
Impact of relative scarcity
Decisions need to be made on how to allocate our scarce resources → opportunity costs arise
Three factors of production
- Natural resources
- Labour resources
- Capital resources
Natural Resources
Productive inputs that occur in nature, for example agricultural soils, minerals, forests and water
Labour Resources
Intellectual skills, knowledge, physical and mental exertion provided by people
Capital Resources
Manufactured or producer goods to aid current and future production
VCAA 2017
Relative scarcity can best be defined as
A. wants in relation to needs.
B. wants in relation to resources.
C. unlimited wants in relation to limited resources.
D. limited wants in relation to unlimited resources.
C
Needs
Basic goods and services that are essential for survival
Wants
Goods and services desirable to improve quality of life, but are not essential
Problem of scarcity and choice arise because
A. wants are always limited
B. resources are limited relative to wants, which are virtually unlimited
C. resources and wants are unlimited
D. we do not have enough money
B
Which of the following is not generally classifed as a physical capital resource?
A. An artificial snow making dam at Mount Hotham
B. Powerlines owned by Powercor
C. Manufactured items produced by firms to help produce other goods and services
D. Household washing machine
D
True/False: Resources are the outputs used by businesses to produce the goods and services that consumers need/want
False
Resources are the inputs
