Human wants are infinite
while resources are finite or scarce
the main purpose of economic activity is to produce goods and services to provide out needs and wants
an economic system tries to answer these questions:
- what should we produce?
- how should we produce it?
- who should it be produced for?
How do we satisfy unlimited wants with limited resources? we make choices.
opportunity cost - the next best alternative given up when an economic decision is made.
economic goods - goods that are scarce or made from scarce resources and so have an opportunity cost e.g. tablets, clothes, food, etc.
free goods - good that have no oppotunity costs, e.g. air
goods - things you can touch (or smell)