Scarcity, Needs & Wants
What is the difference between a need and a want?
A need is something necessary for survival, while a want is something people would like to have.
What does CELL stand for?
Capital, Enterprise, Land, Labour.
Who are the two participants in the two-sector circular flow model?
Households and businesses.
Which market involves people buying and selling homes?
Housing market.
What is demand?
The quantity of a good or service consumers are willing and able to buy.
Why does scarcity exist in every economy?
Because resources are limited but human wants are unlimited.
Which resource includes natural resources such as forests and minerals?
Land.
In the circular flow model, who buys goods and services?
Households.
Which market involves people buying and selling shares?
Stock market.
According to the law of demand, what usually happens when price increases?
Quantity demanded decreases.
A student has $20 and can only buy a movie ticket or a new shirt. Which economic concept is demonstrated?
Opportunity cost.
Someone opens a café and takes the risk of investing their money. Which resource is being provided?
Enterprise.
What do households provide to businesses in the factor market?
Resources such as labour.
What payment is earned in the labour market?
Wages.
According to the law of supply, what usually happens when price increases?
Quantity supplied increases.
What is the opportunity cost of choosing to buy a movie ticket instead of the shirt?
The shirt that was not purchased.
A delivery truck used by a business is an example of which resource?
Capital.
Why are households important to businesses in a market economy?
They buy goods and services and provide resources for production.
A person purchases Japanese Yen before travelling overseas. Which market are they participating in?
Foreign exchange market.
What is equilibrium?
The point where quantity demanded equals quantity supplied.
Explain the relationship between scarcity and opportunity cost.
Because resources are limited (scarcity), people must make choices, and every choice has an opportunity cost.
A farmer uses workers, tractors and farmland to grow wheat. Identify three CELL resources being used.
Labour (workers), Capital (tractors), Land (farmland).
Explain how households and businesses depend on each other in the circular flow model.
Households provide resources to businesses, and businesses provide income, goods, and services to households.
Match the following markets with their payment: Labour, Housing, Shares, Currency
A market has Quantity Demanded = 120 and Quantity Supplied = 80. Is there a shortage or a surplus?
A shortage, because demand is greater than supply.