Economic problem
- Created by: erinjones1234
- Created on: 23-01-18 18:22
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- Economic problem - scarcity and choice
- Economic and free goods
- Free good, such as air are naturally abundant in supply
- Economic goods, are consumable items which are scare in relation to demand. Human effort is needed to obtain it.
- Implications of the basic 'economic problem'
- The basic economic problem is an unlimited amount of wants but a limited amount of resources causing scarcity.
- Normative and positive statements
- Normative, based on opinion 'the government should provide basic health care'
- Positive, true and based on fact 'smoking can shorten life expectancy'
- Scarcity,the state of being scarce or in short supply; shortage.
- Evaluate with an example the problem of scarcity: oil is scarce and yet has a huge demand.
- Economic agents
- Households, make choices about expenditure
- Firms, produce goods or services
- Government, make decisions for the whole of society
- Factors of production
- Land, Labour, Capital and Enterprise
- Land, Resources
- Labour, Human input
- Capital, Fixed capital = machinery. Working capital = stocks (half finished goods)
- Enterprise, entrepreneurs organise factors of production
- Labour, Human input
- Land, Resources
- Land, Labour, Capital and Enterprise
- Economic and free goods
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