1.3.1 Scarcity

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8 Terms

1
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The basic economic problem

Unlimited wants, finite resources

  • choices need to be made on allocation of resources (to maximize utility)

2
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Renewable resources

When exploited can replenish resources, won’t run out

3
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Non-renewable resources

When exploited, resources can’t replenish - run out

4
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Scarcity

limited amount of resources at a point in time

5
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Opportunity cost

Benefit lost from next best alternative foregone

6
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Link between scarcity and opportunity cost

Due to scarcity, choices need to be made on allocation of resources

  • Maximise utility

  • Option not chosen = opportunity cost

7
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Free goods

Resources are unlimited, no opportunity cost

8
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Economic goods

Scarce, have opportunity cost