Business Economics Topic 1: The Central Economic Problem

Flashcards covering the central economic problem, including scarcity, opportunity cost, factors of production, and the Production Possibility Frontier (PPF) based on Parkin (2023).

Economics is the study of how people, firms and societies choose to allocate their __________ resources to satisfy some of their unlimited wants.

scarce

The study of the choices that individuals and business make, the way these choices interact, and how the government can exert influence on them is called __________.

Microeconomics

__________ is the study of the performance of the national and the global economy.

Macroeconomics

The condition in which our wants for goods are greater than the limited resources available is known as __________.

Scarcity

Things that we must have to survive are called __________, whereas things we would like to have but are not necessary for survival are called wants.

needs

__________ is defined as the next best alternative foregone when an economic decision is made.

Opportunity cost

The four main categories of factors of production are land, labour, __________ and entrepreneurship.

capital

The factor of production __________ includes natural resources such as minerals, forests, and water.

Land

Work time and work effort that people devote to producing goods and services is defined as __________.

Labour

__________ capital refers to the knowledge and skill that people obtain through education, on-the-job training, internships or work experience.

Human

Man-made resources such as factories, machinery, tools, roads, computers and buildings are classified as __________ capital.

physical

The human resource that organises land, labour, and capital to produce goods and bear the risks of business decisions is called __________.

Entrepreneurship

The __________ shows the maximum combinations of goods and services that can be produced by an economy in a given period if all resources are used fully and efficiently and the state of technology is fixed.

Production Possibility Frontier (PPF)

A point located __________ the PPF is unattainable for an economy.

outside

Production at any point inside the PPF means not all factors of production are being used efficiently, a situation also known as __________.

under-utilisation

According to the transcript, bubble tea shops were temporarily closed during the ‘circuit breaker’ in __________, implying an under-utilisation of resources.

$$2019$$

A __________ PPF indicates increasing opportunity cost, where larger and larger quantities of one good must be sacrificed to produce more of another.

concave

A __________ PPF signifies constant opportunity cost.

straight-line

Economic growth is the expansion of the economy’s production possibilities and is illustrated by an __________ shift of the PPF.

outward

Economic growth can occur due to technological improvement or an __________ in the amount of resources a country has.

increase