The Economic Problem 2

Although people may satisfy their basic needs there is always something more that they want.

To what economic issue does this statement refer?

• exchange

• market forces

• scarcity

• income distribution

What is the basic economic problem facing all economies?

• inequality of income

• insufficient resources

• low economic growth

• shortages of skilled labour

Which statement best explains why drought is an economic problem?

• Drought cannot be controlled.

• Rainfall is unreliable.

• The effects of drought involve the government.

• Water is a scarce good.

Although people may satisfy their basic needs there is always something more they want.

To what economic issue does this statement refer?

• exchange

• market forces

• scarcity

• income distribution

What is the basic economic problem facing all societies?

• how to achieve price stability

• how to keep employment levels high

• the extent to which incomes should be redistributed

• what will be produced, how and for whom

What makes choice an important element in the basic economic problem?

• Increased demand leads to higher market prices.

• Limited resources have many alternative uses.

• Reaching a market equilibrium may take a long time.

• Scarce economic resources are distributed equally.

Every business organisation faces the problem of satisfying wants.

What is the reason why wants are not fully satisfied?

• An economy can only produce a limited amount of goods and services.

• Governments cannot print enough money to pay for goods and services.

• There is an over-production of goods and services by business organisations.

• Workers are too skilled for the requirements of the jobs available.

Economics textbooks often start by identifying the existence of the basic economic problem.

What is it that makes this problem ‘basic’?

• It affects all economies and individuals.

• It is the most urgent target of government economic policy.

• It only affects low-income developing economies.

• It relates to the production of raw materials in the primary sector.