ECONOMICS UNIT 1: THE BASIC ECONOMIC PROBLEM

The Basic Economic Problem: Infinite wants and Finite resources. There's only a limited amount of resources available to satisfy our wants and these need to be allocated.

Scarcity:The world's resources are finite, there is only a limited amount of land, oil, water, food ect on the planet. These resources (that are scarce) are referred to as 'ECONOMIC GOODS'

Free Goods:Resources which do not suffer from scarcity i.e. air

Human Needs:Goods that are required to survive i.e. shelter, food, liquid, clothing - Human Needs are finite.

Human Wants:Extra goods that are not required to survive but will increase the standard of living i.e. iPods and Jewellery - People will always want to better their standard of living, which is why human wants are infinite.

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