Unit 1: The Basic Economic Problem Flashcards
Economic Goods
Resources which are scare because their use has an opportunity cost
Basic Economic Problem
Resources have to be allocated between competing used because ants are infinite whist resources are scarce
Free Goods
Goods that are unlimited in supply, so they have no opportunity costs.
Opportunity Cost
The benefits forgone of the next best alternative
Production possibility frontier
A curve which shows the maximum potential level of output of one good given a level of output for all other goods in the economy
Government failure
Government intervention that leads to the mis allocation of resources
Free Rider Effect
One person loses welfare whilst another gains
Scarce resources
Resources which are limited in supply so that choices have to be made about their use
Wants
Desires for the consumption of goods and services
Choice
Economic choices involve the alternative uses of scarce resources
Market Failure
Market intervention that leads to the mis allocation of resources
Margin
A point of possible change
Needs
The minimum which is needed for a person to survive as a human being
