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Wants vs Needs
wants are unlimited, according to economists. Needs are what are needed for basic human survival (eg food, shelter, clean water)
Scarcity
A situation that arises where people have unlimited wants, however the resources needed to meet these wants are finite.
Opportunity Cost
The value of the next best alternative forgone when a choice is made
the ‘economic problem’
how to best allocate scarce resources between alternative uses, to maximise economic welfare
Factors of production
resources used in the production process.
what are the factors of production?
labour
capital
land
entrepreneurship
Labour (human resources)
the quantity of workers and their skill and knowledge (factory workers knowledge, secretary’s time)
Capital (physical resources)
resources that are man made for production (roads, factories).
most factors of production are often capital
land (natural resources)
non-renewable and renewable natural sources (wind, solar, coal, oil)
entrepreneurship (entrepreneurial resources)
the organisation and risk-taking of a manager, who will bring resources together as a means of production.
four main sectors
primary - the farming of raw materials and foods
secondary - industrialising raw goods into manufactured goods
tertiary - providing services and service-related industries
quaternary - branch of the tertiary sector; added information technology, research and development
free goods
goods with no opportunity cost
economic goods
goods that have opportunity cost. therefore, there will be an element of scarcity
Note 
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