The basic economic problem is ____. Wants are ____ and resources are finite, so choices have to be made. Resources have to be used and distributed ____. Scarcity refers to the shortage of ____ in relation to the quantity of human ____ The ____ of scarcity gives rise to ____ cost. The opportunity cost of a choice is the value of the next best alternative forgone. In the above example, the opportunity cost of choosing the crisps is the chocolate bar. If a car was bought for ____ and after 5 years the value depreciates by £5,000, the opportunity cost of keeping the car is ____ (which could have been gained by selling the car), regardless of the starting price. Opportunity cost is important to ____ agents, such as consumers, ____ and governments. For example, producers might have to choose between hiring extra staff and ____ in a new machine. The government might have to ____ between spending more on the NHS and spending ____ on education. They ____ do both because of finite resources, so a choice has to be made for where ____ are best spent. When producing goods, the economy has to consider the following questions: o ____ to produce: determined by what the consumer prefers. Consumers tell producers what they prefer by demanding goods and using their ‘spending votes’ and demanding certain goods. o ____ to produce it: producers seek profits and aim to minimise production costs. o For ____ to produce it: whoever has the greatest ____ power in the economy, and is therefore able to buy the good.

Economics Scarcity, Choice and potential conflicts

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