Basic Economic concept

Need

Things we require in order to survive

Want

Things we would like to have

Limited means

Our personal resources (time, skills, money)

Opportunity cost

The next best alternative when giving up an option

Choice

An economic decision between two or more alternatives

scarcity

We have unlimited wants but limited means

Relationship between Opportunity cost, choice, limited means, wants, scarcity

Because our wants are unlimited but our means are limited, scarcity exists. This forces people to make choices, and every choice has an opportunity cost

Study of Economics

How people make choices about limited resources to satisfy their needs and wants

Values

Core beliefs and ideas a person, group or society consider to be important. They affect people decision making

Conflict

A disagreement

Compromise

A solution for the disagreement which involves both parties giving something up

Consumers

a person who uses goods or services

Producers

A person who produces goods or services

Good

A tangible item - something we can physically touch

Service

AN intangible item - things provided to help or benefit someone

Free Goods

Goods we have unlimited supply in and has no price

Free good example

Air, sun, water

Economic good

A good that is limited in supply, and has a price

Example of an economic good

Oil, houses, cars, etc

Consumer goods

Goods used for personal consumption

Capital good

A good that is used to produce another good or service

Production

Bring into existence goods and services

Four factors of production

Land, Labor, Capital, Entrepreneurship

Land

Natural resources used to produce goods and services

Example of land in factors of production

Farmers land

Labor

Human resources, our physical effort to produce goods and services

Capital

Man made resources used to produce goods and services

Example of Capital in factors of production

Machinery

Entrepreneurship

Human creativity, such as business ideas and risk taking in bringing together all resources to create the good or service

Example of entreprenurship in factors of production

Someone starting up and managing a business

Transformation Process

Inputs —> Process —> Output

Input

Resources we need to produce a product

What are the sectors of the economy

Primary, Secondary, Tertiary

Primary Sector

Gets the raw materials from nature in order to produce the good or service

Example of primary sector

Farming, Fishing, Mining

Secondary Sector

Uses the raw materials to process them into finished goods or services

Example of secondary sector

Factories, construction

Tertiary Sector

Provides services to people and businesses

Example of tertiary sector

Shops, banks, hairdressers

Labor intensive production

Production relying on more workers than machines

Capital intensive production

Production that relies more on machinery, tech and equipment more than workers

Types of Natural resources

Renewable and Non-renewable

Renewable resources

replenished naturally in a short period of time

Example of renewable energy

Trees, vegetables, sun, animals

Non-renewable resources

Takes longer than reasonable time to be regenerated

Example of Non-renewable resources

Diamonds, oil, coal