1.1.3 The economic problem

• Economic problem:


  There are scarce (finite) resources and unlimited wants.
• Renewable resources and non-renewable resources:


  Renewable resources can be exploited over and over again - E.g. solar energy.

  Non-renewable resources can only be exploited once -

  E.g. coal.
• Opportunity cost:


  The benefits forgone of the next best alternative.

  Consumers, firms and governments all face opportunity costs.