Scarcity, Choice, and Factors of Production

Vocabulary flashcards covering fundamental economics concepts including needs, wants, opportunity cost, financial cost, rational choices, scarcity, and the four factors of production with their rewards.

Economics

The study of how people, businesses, and governments with limited resources make choices and decisions to meet their needs and wants.

Economic Resources

The factors or things used to produce and distribute goods, services, and wealth.

Need

Something that is essential for survival, such as food, water, or shelter.

Want

Anything that we would like to have but do not need to survive, such as a holiday or a trip to the cinema.

Opportunity Cost

The item you do not buy or choose in order to buy another item.

Financial Cost

The price or monetary cost of the item you choose to buy.

Rational Choice

A choice based on reason or logic where the expected gains outweigh the expected losses.

Factors of Production

The economic resources needed to produce goods and services, comprised of land, labour, capital, and enterprise.

Land (Factor of Production)

Anything provided by nature and used to produce goods and services, including non-renewable resources like oil and coal, and renewable resources like solar power, wind energy, and water.

Rent

The economic reward received for providing the factor of production known as land.

Labour

The people involved in producing a good or service, such as carpenters, factory workers, teachers, or electricians.

Wages

The financial reward earned by people for providing the factor of production known as labour.

Capital (Factor of Production)

Physical items made by people and used in the production of goods or services, such as buildings, machinery, vehicles, and computers.

Interest

The financial reward earned on the factor of production known as capital.

Enterprise

Any attempt to start or do something new; it brings together land, labour, and capital to produce a product or a service.

Profit

The reward earned by enterprise for taking the initiative and risk to create goods and services.

Scarcity

The limited availability of resources relative to human needs and wants, requiring individuals, businesses, and governments to make choices.

Three Common Features of Economic Resources

The three characteristics shared by all economic resources: they have value, they have alternative uses, and they are scarce or limited in supply.