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The Basic Economic Problem - Coggle Diagram
The Basic Economic Problem
What is the basic economic problem?
The basic economic problem is when there is a mismatch between the unlimited wants of the people (consumers), and the limited economic resources available.
How do the Basic Economic Problem occur?
The basic economic problem occurs when there are unlimited wants and needs, and limited resources to satisfy these wants and needs.
What is Scarcity?
When there are not enough resources to satisfy every need.
What are wants and needs?
wants- Goods and services that are not essential/ vital for basic human survival
E.g Watches, bags, jewellery, expensive clothes and item (basically materialistic things)
needs- Goods and services that are essential for basic human survival
E.g Foods, water and shelter
What are goods and services?
Goods- Physical items
E,g toothpaste, table, chairs, cars
Services- Non-physical items
E,g Transportation, hair cuts, phone calls, internet access
What are free goods?
Free goods are goods that are unlimited in supply
E,g sea water, the air we breathe
Economic goods are goods that are limited in supply
E.g Wheat, cotton and oil
What are trade-offs?