Definitions Unit 1 Quiz 1

A good or service essential for living.

• Want

• Water

• Need

• Food

A good or service which people would like

to have, but which is not essential for living. These are unlimited

• Want

• Home

• Need

• Food

These are those resources needed to produce goods or services. There are four factors of production and they are in limited supply.

• Sectors of the Economy

• Goods and Services

• Stages of Production

• Factors of Production

This is the lack of sufficient products to fulfil the total wants of the population.

• Shortage

• Scarcity

• Deficit

• Insufficiency

This is the next best alternative given up by choosing another item. It is the result of scarcity meaning that we have to choose between options and one will be rejected.

• Opportunity Cost

• Needs and Wants

• Goods and Services

• Scarcity

This occurs when people and businesses concentrate on what they are best at. For example, Shell is an oil extraction company, Toyota produces cars and Apple produces computers and cell phones.

• Division of Labour

• Enterprise

• Functional Organisation

• Specialisation

This is when the production process is split up into different tasks and each worker performs just one of these tasks. For example, in a car factory, one worker could weld the frame, another could install the windows, a third could install the seats and someone else could paint the car.

• Division of Labour

• Work

• Production

• Specialisation

These combine factors of production to make products (goods and services) which satisfy people’s wants.

• Producer

• Business

• Service Provider

• Multinational

This is the difference between the selling price of a product and the cost of bought-in materials and components.

• Profit

• Cost

• Added Value

• Revenue

In the world, there exists a situation of unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity.

• Basic Economic Problem

• Opportunity Cost

• Shortages and Surpluses

• Wants and Needs