Chapter 1

• The basic economic problem

  • People have unlimited wants & needs but there are limited resources
• Need


  Good or service required for survival
• Want


  A desire
• Key economic decisions


  • What to produce?
  • How to produce?
  • Who benefits?
• Main economic groups


  • Consumers
  • Producers
  • Government
• Consumers


  Those who demand the goods & services
• Producers


  Supply goods & Services
• Government


  Decides who should benefit and how to distribute the goods & services produced
• Factors of production


  • Land
  • Labour
  • Capital
  • Enterprise
• Land


  Natural resources
• Capital


  Human-made items used in production e.g. printer
• Enterprise


  Other factors of production that takes a risk in organising the other three factors of production. The entrepreneur.
• Scarce resources


  Insufficient amount of something to satisfy all wants
• Opportunity cost


  The next best alternative given up when making a choice
• Economic choice


  An option for the use of selected scarce resources