Unit 1: Scarcity

• What is the basic economic problem?


  Resources are scarce.
• What is scarcity?


  When there is a finite number of resources but infinite wants and needs
• What are factors of production?

  Land, labor, capital, and entrepreneurship. Factors mentioned in economics
• What is the consequence of scarcity?

  Individuals and governments have to learn how to use resources in an efficient way
• How does scarcity influence prices in a free market?

  The more scarce, the more expensive. The less scarce, the cheaper.
• What are the types of resources?

  Renewable resources can be used repeatedly and naturally replenished, for example wind generated electricity. Non-renewable resources cannot be used repeatedly and naturally replenished.
• What is Opportunity cost?


  The loss of the next best alternative when making a decision
• What's the connection between opportunity cost and scarcity?

  Choices are made on how to best allocate limited resources amongst competing needs and wants.
• What's the connection between opportunity cost and resources?

  There's opportunity cost in the allocation of resources.