Edexcel b Economics Theme 1

1.1.1) The Economic Problem 1.1.2) Business Objectives

1.1.1) What is the economic problem?

People have unlimited needs and wants but their are a finit amount of reasources creating scarcity. So, choices must be made on how to use these reasources.

1.1.1) What is economic activity?

Economic activity is the production of goods and services to satisfy need and wants.

1.1.1) What is economic welfare?

Economic activity improves economic wlefare, which is the benefit gained by individuals , frims or society in the production of goods and services.

1.1.1) What are needs?

Needs are things which are essentials for survival.

1.1.1) What are wants?

They are things which are desired but are not essential for survival.

1.1.1) What are renewable reasources?

Renewable reasources are ones that can be replenished. Trees are used for feul but they can be replanted.

1.1.1) What are non-renewable reasources?

Non-renewable reasources are ones that are in a finite supply and cannot be replenished. Crude oil or natural gas.

1.1.1) WHat are sustainable reasources?

Sustainable reasources are ones that are being used for economic activity but have to be used in a manner in which they will not run out. Not over fishing.

1.1.1) What is oppurtunity cost?

Oppurtunity cost is the benifit lost of the next best alternative when making a choice. If you buy ice cream, you loose the opputunity of having cake.

1.1.1) WHta is trade-offs?

Trade-offs are the range of alternatives choices that have been given up.

1.1.1) What are economic agents?

They are individulas, firms and goverments who partake in economic activity, the deamnd and supply for goods and services.

1.1.1.) What is a free market economy ?

Free market economy is one where firms decide what goods and services to produce with minimal government intervention.

1.1.1) What to produce?

1.1.1) How to produce?

1.1.1) For whome to produce for?

1) Economic incentives provide economic agents with the information required to tell them what goods and services to produce.

2) Firms combine factors of production (Land, Labour, Capital, Entrepreneurship), to produce a good or service?

3) In free market ecnomy we produce based on supply and demand for a good or service.

1.1.1) What is the nature and purpose of economic activity?

FInite reasources, Infinite Wants, Needs, Wants, Economic Problem, Scarcity, Choice, Economic Activity, Economic Welfare, Economic Agent, Free Market Economy.