IGCSE Economics - Unit 1 - The Basic Economic Problem

capital / capital goods

artificial goods used in production.

consumer goods

goods and services purchased by households for their own satisfaction.

depreciation (capital consumption)

the value of capital goods that have worn out or become obsolete.

economic good

a product which requires resources to produce it.

enterprise

risk-taking and key decision-making in business.

entrepreneur

a person who takes the risks and makes the key decisions in a business.

factors of production

the economic resources of land, labour, capital and enterprise.

free good

a product which does not require any resources to make it.

gross investment

total spending on capital goods.

investment

spending on capital goods.

labour

human effort used in production.

labour force

people in work and those actively seeking work.

labour productivity

output per worker hour.

land

natural resources used in production.

negative net investment

a reduction in the number of capital goods caused by some obsolete and worn-out capital goods not being replaced.

net investment

gross investment minus depreciation.

output

goods and services produced by the factors of production.

productivity

the output per factor of production in an hour.

resources

inputs used to produce goods and services.

scarcity

a situation where there are not enough resources to satisfy everyone's wants.

the basic economic problem

where unlimited wants are greater than finite resources.

wants

desires for goods and services.