the economic problem and opportunity cost

scarcity

a situation that arises because people have unlimited wants in the face of limited resources

economic goods

goods that are scarce

free goods

goods such as the earths atmosphere that are not normally regarded as being scarce

poverty

a situation in which individuals lack the basic necessities of life of have low incomes relative to their fellow citizens

firm (business)

an organisation that produces output (goods or services)

positive statement

a statement about what *is*, i.e. about facts

normative statement

a statement involving a value judgement about what ought to be

value judgement

a statement based on your opinion or beliefs, rather than facts

factors of production

resources used in the production process, or inputs into production, including labour, capital, land and enterprise

opportunity cost

in decision making, the value of the next best alternative forgone

production possibility curve (PPC)

a curve showing the maximum combinations of goods and services that can be produced in a set period of time given available resources

trade-off

a situation in which the choice of one alternative requires that sacrifice of another

capital goods

goods used as part of the production process, such as machinery or factory buildings

consumer goods

goods produced for present use (consumption)

long-run economic growth

an expansion in the productive capacity of the economy