2. Economic Activity, Resources and Scarcity

What is the Economic Problem

Individuals have unlimited wants but there are limited/scarce resources to tend to those wants

How do we allocate scarce resources to satisfy needs and wants

What is the Central Purpose of Economic Activity

To produce goods and services to satisfy needs and wants

What is Opportunity Cost

The cost of the next best alternative forgone when a decision is made

What are the three economic decisions

What to produce - and how much of each good should be produced

How to produce - How much does each Factor of Production cost and how productive are they

For whom to produce for - Consumers who have purchasing power can benefit from the goods and services produced

What are the four factors of production and what are their rewards

Capital - Interest

Enterprise - Profit

Land - Rent

Labour - Wages

Is the environment considered a scarce resource and why

Yes as we have a mixture between renewable and non renewable resources