The Economic Problem

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The Economic Problem
- Scarcity
  - Not all resources are scare e.g. air, these are free goods.
    - With population growth has changed some resources from free goods to economic goods.
    - With deforestation and air pollution means air may become an economic good.
Infinite Wants
- The Economic Problem
  - Scarcity
    - Not all resources are scare e.g. air, these are free goods.
      - With population growth has changed some resources from free goods to economic goods.
      - With deforestation and air pollution means air may become an economic good.
The Basic Problem
- 'Resources are scarce but Wants are infinite.'
We live in a global village with FINITE resources.
Means that there are only limited amounts of land, water, oil, food and other resources on Earth.
Scare resources are called economic goods.
Physical and Mentally, e.g. food, water, shelter, heat, clothing, love and self-esteem.
- People have a limited number of needs to survive.
  - Infinite Wants
People have a infinite wants whatever their background.
- Wants include more food, larger housing, longer holidays etc.
Wants include more food, larger housing, longer holidays etc.
Free goods have no opportunity cost. No resources are being sacrificed when the good is consumed.
- Creating an opportunity cost

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