The Economic Problem

  • Created by: alisha1c
  • Created on: 21-09-15 13:33
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  • The Economic Problem
    • The theory
      • All humans have psychological needs that must be satisfied in order to survive.
        • Over time these needs develop into "wants".
      • The Basic Economic Problem
        • Our desire for "wants" is limited but the resources to produce these "wants" is limited.
          • We have something called "Scarce resources", meaning the factors of production to make the goods are limited.
            • Scarce resources included: C.E.L.L
              • Capital
                • Includes all man made resources such as: Machinery, computers or buildings. To help produce a goods and services.
                • Fixed Capital: machinery, technology and factories.
                • Enterprise
                  • This is the organisation of resources and management.
                    • This resource brings people together to produce output.
                  • Involves risk taking.
                  • Land
                    • Natural resources such as: physical land and water.
                    • Commodities(raw material or agricultural) e.g. coffee or copper.
                    • Labour
                      • All human resources involved in the production of making a good or service.
                      • The Ideal Goal
                        • Increase economic welfare= peoples happiness.
            • Because of scarcity we as a society have 3 questions and choices to make.
              • 1) What goods and services to produce? (e.g. In what quantities?).
              • 2) How to produce? (e.g. What technique of production?).
              • 3) Whom to produce the goods and services for? (e.g. How will the products be distributed?).


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