The Economic Problem
Resources are limited but human wants are unlimited.
What is scarcity?
Land, labour, capital and enterprise.
What are the four factors of production?
An economy where decisions are made mainly by consumers and firms.
What is a market economy?
A graph showing the maximum output of two goods using limited resources.
What is a production possibility curve?
Producing at the lowest cost using resources fully.
What is technical efficiency?
The need to select between alternatives because of scarcity.
What is choice?
Human effort, both physical and mental, used in production.
What is labour?
An economy where the government controls most production decisions.
What is a command economy?
Points inside the PPC show this.
What is inefficient use of resources?
Producing the mix of goods most wanted by society.
What is allocative efficiency?
The best alternative that is given up when a decision is made.
What is opportunity cost?
Machinery, tools and equipment used to produce other goods.
What is capital?
Australia’s economic system, combining market forces and government intervention.
What is a mixed economy?
Points outside the PPC are this.
What is unattainable production?
An outward shift of the PPC caused by better technology.
What is economic growth?
A Latin assumption meaning “all other things being equal.”
What is ceteris paribus?
The factor responsible for organising resources and taking risks.
What is enterprise?
The three key questions all economic systems must answer.
What are what to produce, how to produce, and who receives goods and services?
Moving along the PPC shows this key economic concept.
What is opportunity cost?
A bushfire or war causes this movement of the PPC.
What is an inward shift of the PPC?
The central problem all economies face when allocating limited resources.
What is the fundamental economic problem?
The income earned by labour, land, capital and enterprise.
What are wages, rent, interest and profit?
A key disadvantage of a pure market economy.
I will accept multiple answers for this one.
e.g. What is inequality, under-provision of public goods, or exploitation of labour?
A bowed-out PPC shows this type of opportunity cost.
What is increasing opportunity cost?
Education and training that increase worker productivity.
What is human capital investment?