Theme 1 -The Economic Problem

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  • Created by: becky.65
  • Created on: 05-12-16 18:28
What is scarcity?
Where there are unlimited wants and finite resources
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When does the 'economic problem' occur?
When there is scarcity
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What is the central purpose of economic activity?
It is to produce goods and services to satisfy the wants and needs of society
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What will economic activity improve?
Economic welfare, the benefit gained by individuals, firms or society in the production of goods and services
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What is a need and give four examples of a need?
Needs are those things that are essential to survival i.e water, warmth, food, shelter
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What are wants?
Those things that are desired but not essential to survival
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What 3 questions does the economic problem try to answer?
What to produce? How to produce? Who to produce for?
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What is an opportunity cost?
It is the best alternative we give up when we make a choice
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Why must we make choices in business?
Because all resources are scarce so we must make choice in order to allocate these resources
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What are trade-offs?
It is when businesses make a compromise between a range of choices
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What are economic agents?
The individuals, firms ad governments that partake in economic activity, the demand and supply of goods and services
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What is a free market?
One where firms decide what goods and services to produce with limited government intervention
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What are the four factors of production?
Capital, enterprise, land and labour
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Other cards in this set

Card 2

Front

When does the 'economic problem' occur?

Back

When there is scarcity

Card 3

Front

What is the central purpose of economic activity?

Back

Preview of the front of card 3

Card 4

Front

What will economic activity improve?

Back

Preview of the front of card 4

Card 5

Front

What is a need and give four examples of a need?

Back

Preview of the front of card 5
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