Unit 1: The Basic Economic Problem Flashcards
Wants
Desires for goods and services
Resources
Factors used to produce goods and services
The economic problem
Unlimited wants exceeding finite resources
Scarcity
A situation where there is not enough to satisfy everyone’s wants
Economic good
A product which requires resources to produce it and therefore has an opportunity cost
Free good
A product which does not require any resources to make it and so does not have an opportunity cost
Factors of production
The economic resources of land, labour, capital, and enterprise
Land
Gifts of nature available for production e.g. land, trees, water
Labour
Human effort used in producing goods and services
Capital/capital goods
Human-made goods used in production
Consumer goods
Goods and services purchased by households for their own satisfaction
Enterprise
Risk bearing and key decision making in business
Occupationally mobile
Capable of changing use
Geographically mobile
Capable of moving from one location to another location
Mobility of labour
the ability of labour to change where it works or in which occupation
Mobility of capital
the ability to change where capital is used or in which occupation
Mobility of enterprise
The ability to change where enterprise is used or in which occupation
Entrepreneur
A person who bears the risks and makes the key decisions in a business
Labour force
People in work and those actively looking for work
Productivity
The output per factor of production in an hour
Labour productivity
Output per worker hour
Output
Goods and services produced by the factors of production
Investment
Spending on capital goods
Gross investment
Total spending on capital goods
