The basic economic problem

Topics

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Sample objectives

What this unit covers

• The nature of the economic problem: Understand the concept of limited resources in contrast to infinite desires, including definitions and examples related to consumers, workers, producers, and governments.
• The nature of the economic problem: Distinguish between economic goods, which are scarce and require allocation, and free goods, which are abundant and available without cost.
• The factors of production: Understand the definitions of the factors of production and the rewards associated with them, including examples of land, labour, capital, and enterprise, as well as the characteristics of each factor.
• The factors of production: Examine the mobility of the factors of production and the various influences that affect their movement.
• Opportunity cost: Understand the concept of opportunity cost, including its definition and examples across various situations.
• Opportunity cost: Examine how opportunity cost affects the choices made by consumers, workers, producers, and governments in resource allocation.
• Production possibility curve (PPC) diagrams: Understand the definition of the Production Possibility Curve (PPC), including how to draw and interpret relevant diagrams.
• Production possibility curve (PPC) diagrams: Recognize the importance of production points that are located under, on, and beyond the PPC.