1.1.3 the economic problem

• factors of production are:

  • capital (machines)
  • enterprise (someone who takes risks)
  • land
  • labour
• capital is man-made tools such as machines buildings and they are used in the production process it isn't money
• economists have the important question of

  what to produce

  how to produce

  for whom to produce
• scarce means that resources are limited and are insufficient so they can't satisfy all human needs
• human wants are infinite(unlimited) whereas the resources to meet these wants are finite(scarce)
• the opportunity cost is the value of the next best alternative forgone
• renewable can be used again
• non-renewable can only be used once and then never again