Key Basic Defenitions

What is Economics?

A social science where consumers, businesses and the Government have to make choices due to the scarce resources and unlimited wants (e.g. money, time and effort) to improve the wellbeing and standard of living.

Def of Micro Economics

covers how individuals, households and firms behave and how their decisions about allocating scarce resources affect specific markets and industries.

Macro Economics

Focuses on wider issues and economy as a whole. (e.g. inflation, unemployment, interest rates)

What is the main economic problem and why does it exist?

There are a limited availability of resources but unlimited wants and needs. It exists due to the scarcity of resources and the need to make suitable choices on allocation of resources based on the limited availability.

What is opportunity cost?

The next best alternative foregone when an economic choice is made.

What is a need?

Something that is essential for survival.

What is a want?

Something that is desired but NOT essential for survival

What are the 3 basic questions every every society must answer to tackle the issue of scarcity?

1) What good/ services to produce? 2) How to produce the G/S? 3) Who is to benefit from and/or receive the goods and services?

What is economic activity?

The production, distribution and consumption of G/S to meet society’s needs and wants.

3 Main Economic Groups?

Producers, Consumers, Government