The nature of the economic problem
unlimited wants + limited resources
Scarcity
The natural resources required in the process of production
Land
The cost measured in terms of the next best choice given up when making a decision.
Opportunity cost
A place where buyers and sellers engage in trade.
Market
The amount of a good and service demanded at each price level
Quantity demanded
Consumers, Firms, and the government
Economic Agents
The manufactured resources required in the production process
This diagram represents the maximum amount of goods and services which can be produced in an economy, if all resources are used efficiently.
Production Possibility Curve (PPC)
The method of allocating scarce resources through the market forces of demand and supply
Market system / price mechanism
Products that are jointly demanded
Complements
What to produce?
How to produce?
For whom to produce?
Basic economic questions
This sector contains firms that manufacture goods / changing raw materials into finished goods
Secondary sector
This term is used to represent a maximum output of an economy
Productive capacity
This situation occurs when the market price is either above or below the equilibrium price (surplus and shortage might happen)
Market disequilibrium
A price rise will cause a ____________ in the quantity demanded of the product.
Contraction
Firms and individuals produce goods and services in the ....
Private sector
The reward for capital is known as ....
Interest / interest rates
An increase in productivity caused by technological advances and improved in production techniques will make the PPC to ......
Shift outward / shift to the right
If the price is below the equilibrium price, the product is deemed to be too cheap, so this situation will lead to a ....
Shortage
A price rise will cause ____________ in the quantity supplied of a product.
Extension / Expansion
A good that is limited in supply, so human effort is required to obtain this type of good
Economic good
A fixed amount of money paid to the workers per month
Salary
Name two factors affecting a shift inward on the PPC
A natural disaster (storm, tsunami, floods)
A war that destroys farmland / factories / infrastructure
The market system establish ___________ where demand equals supply
Market equilibrium
Mention two factors that will lead to an outward shift of supply curve
Subsidies / Innovations / Low production costs / Lower tax / Favourable weather