economics flashcards lesson 1 -3(basic economic problem +factors of production)

What is the basic economic problem

People have unlimited wants but we have limited resources which eventually leads to scarcity

Who are the 3 main economic agents /decision makers ? And types of their decision making

The consumers (individuals )-what to buy?buy car or save for holiday trip ect?

Firms (businesses)-what to produce ?should we up the marketing or the machinery ect?

the government -which business to let run?new hospital or new school ect?

What are the 3 basic economic questions

HOW to produce?

WHAT to produce?

for WHOm to produce ?

What is a good

Physical items that can be produced ,bought and sold Eg.furniture ,jewelry ect

What are services

Non physical items that firms produce and customers pay for Eg.haircuts

What are needs VS wants

Needs are essential goods and services that people need for survival

Wants are goods and services that are not nessecary for survival but the things that we DESIRE to have

What are economic goods VS free goods

Free goods are unlimited resources Eg.sunlight ,rain so it’s not sold for a price

Economic goods are limited in supply therefore it is scarce so people have to pay a price for them Eg.oil,house,cars

What are the 4 factors of production

Land labor capital enterprise

What are the rewards for the 4 factors of production

Land -rent

Labor-wages

Capital-interest

Enterprise -profit

Land

Increase quantity by acquiring more land and enhancing quality through environmental management and sustainable practices like adding fertilizers

Labour

Increase quantity by acquiring more workers due to immigration and high population or higher wages and enhancing quality through better trained workers

Capital

Increase quantity by buying more machinery and enhancing quality through getting more advanced new technology

Enterprise

Increase quantity by getting more management teams and enhancing quality through better education training and healthcare (same for workers)