Scarcity
What is the definition of scarcity?
The condition of not being able to have all the goods and services one wants due to limited resources.
What is the definition of opportunity cost?
The second-best alternative that must be given up when making a choice.
What are the four factors of production?
Land, Labor, Capital, and Entrepreneurship.
What are unintended consequences?
Unexpected or unplanned results of a decision or action.
What is entrepreneurship?
The process of starting and running a new business by combining the factors of production.
Why is scarcity considered the #1 problem of economics?
Because it affects everyone, not just the rich or poor, and requires choices to be made regarding limited resources.
How can individuals use opportunity cost in decision-making?
By analyzing what they are willing to give up to gain a certain benefit.
Describe what is meant by 'Human Capital.'
The skills and knowledge gained by workers through education and experience.
Provide an example of an unintended consequence from a government policy.
A rent control policy leading to a housing shortage.
Name a famous entrepreneur and describe their contribution.
Henry Ford; he revolutionized the automotive industry with assembly line production.
Give an example of a situation that demonstrates scarcity.
A drought leading to a shortage of water for agriculture.
Provide an example of opportunity cost in a real-life situation.
Choosing to study for an exam instead of going out with friends; the opportunity cost is the time spent with friends.
Give an example of a capital good.
Machinery used in manufacturing.
Why is it important to consider unintended consequences in decision-making?
To avoid negative outcomes that can arise from not fully analyzing the impacts of a decision.
What motivates entrepreneurs to take risks?
The desire to earn profit and create innovative products or services.
What three criteria must a good or service meet to be considered scarce?
It must be limited, desirable, and have a cost.
What is a trade-off?
The giving up of one benefit or advantage to gain another regarded as more favorable.
How does the availability of resources affect a country's economy?
It determines the types of goods and services that can be produced and influences economic growth.
What was the goal behind the bounty on cobras in a historical context?
To reduce the population of cobras, but it led to an increase in their population as people began breeding them for the bounty.
What is the importance of innovation in entrepreneurship.
Innovation allows businesses to differentiate themselves and meet consumer needs more effectively.
How do businesses face scarcity in their operations?
Businesses have limited resources such as space, funds, and labor, which require them to make decisions on resource allocation.
Explain how opportunity costs are relevant in government spending decisions.
Governments must choose how to allocate limited funds, which means giving up other potential projects or services.
What role do entrepreneurs play in the economy?
They combine the other factors of production to create goods and services, innovate, and take risks to generate profit.
How do politicians often overlook unintended consequences?
By focusing on immediate benefits without considering the long-term trade-offs or negative impacts of their policies.
How do entrepreneurs contribute to economic growth?
By creating jobs, fostering competition, and driving technological advancements.