The Basic Economic Problem

1) Consider the following scenario and fill in the boxes in the diagram below. (4 marks) 

You are stranded on a desert island. What are you needs for survival? What would you want to
have with you if you could to make the stay more comfortable/endurable? 

In the above scenario you have a few available resources such as wood, fish, sand, salt water.
Some of them are obviously limited in their supply and so could be considered scarce. 

2) In your own words define the following terms: (4 marks) 

a) needs 
b) wants 
c) resources 
d) scarcity

In the real world we have the same scenario. Billions of people have basic needs for survival,
they also have unlimited wants/desires. The planet has a limited supply of resources which we
can use to satisfy these needs and wants. We have to choose how to best use the resources,
this is the Basic Economic Problem.