The economic problem: Key terms
Free Goods
Economic goods
Choice
The basic economic problem - exists because resources in an economy are finite and people's needs and wants are infinite, so the basic economic problem deals with how best to allocate and use the limited/scarce resources. Website
The four factors of production and rewards
Fixed capital is economic resources such as factories, machinery and land which are used to transform working capital into goods and services
Human capital:
Non sustainable resource
Opportunity cost-The choice we give up in sacrifice of the choice we make. Our opportunity cost is the next best option to the one we selected. For example, if we have the choice to produce; 1.Corn, 2. Wheat, 3. Rapeseed (In order of preference) and we choose Corn, then wheat is our opportunity cost.
(https://www.thebalance.com/what-is-opportunity-cost-357200)
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Renewable resource -
Scarce resources
Scarce resources are resources that are insufficient for demand.
Wants
Working or circulating capital
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Renewable resources - resources that can be exploited over&again because of their potential to renew themselves. E.g. oxygen, fresh water, sunlight, wind, solar energy and biomass. They take millions of years to be made, and cannot be renewed in a human lifetime or even a nation's lifetime. Renewable resource harvesting and use typically do not produce pollution or contribute to global warming.
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Human capital - skills, experience, attitudes, aptitudes of the human input into production
https://www.economicshelp.org/blog/26076/economics/human-capital-definition-and-importance/
The resources that people use in order to produce a goods or service
Resources which are scare.
Have a desire to possess or do something; wish for. A desire for something. Definition of want
A choice refers to the decisions that consumers make in regard to products and service
Needs
Essential goods that are required by every human being
For example: bread, water, clothing, shelter.
Land (where the factory is built), Labour (the workers in the factory), Capital (the machinery) and Enterprise (the people that started the business)
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For example, there is not enough gold for every person in this world. That is why its price is very high to ensure that not everyone can afford it and it stays exclusive.
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goods that are unlimited in supply and which therefore have no opportunity cost
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Sustainable Resource
An example of a Sustainable Resource is forestry as the trees are replanted after being chopped down, keeping the number of trees the same.
Sustainable Resource - a renewable resource that is being economically exploited in such a way that it will not diminish or run out.
Non renewable resources are resources that cannot be replaced after they are used. For example, coal and oil. Non renewable resources examples
the value of the productive potential of an individual or group or workers; it is made up of skills , talents, education and training of an individual or group and represents the value of future earnings and production.
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