Unit 1: 1.2 Flashcards

The Basic Economic Problem

How to best use limited resources to satisfy the unlimited wants of people

Scarce resources

when there is an insufficient amount of factors of production to satisfy all wants.

Unlimited wants

The infinite desire for something, whether or noth the consumer has the ability to purchase it

Need

A need is something you have to have, something you cant do without to survive. Needs are limited

Want

A want is something that you would like to have. It is not absolutely necessary, but it would be a good thing to have. Wants are unlimited

What should be produced?

Depends on decisions by consumers what they need and want but also government decisions on spending in public sectors e.g. boost to NHS budget will increase amount of medical procedures

How should it be produced?

Producers will decide what factors of production to use

• whether to be labour or capital intensive- in order to maximise efficiency and minimise waste in production

Whom should it be produced for?

• Produced for consumers who can afford to pay for them or provided free at the point of use by the government e.g. state education, NHS

Opportunity Cost

The next best alternative given up when making a choice

Economic Choice

An option for the use of selected scarce resources

Economic Sustainability

The best use of resources in order to create responsible development or growth, now and into the future

Environmental sustainability

The impact of development or growth where the effect on the environment is small and possible to manage, now and into the future

Social Sustainability

The impact of development or growth that promotes an improvement in quality of life and well being for all, now and into the future