Chapter 1: Economic Problem

Key Points:
 The fact that needs are essential while wants are not, means that we cannot
always have everything we like.
 This underpins the economic problem of unlimited wants in relation to scarce
products.


Main Points:

 There are too few productive resources to make all the goods and services
that consumers need and want.
 Unlimited wants and limited resources
 Scarcity of resources is the basic economic problem

Types of goods
 Economic goods: A good or service that has a degree of scarcity and
therefore an opportunity cost.
 Free goods: A good or service that is not scarce and is available in
abundance. For example, the air we breathe.

Exam Questions:

1. Describe whether each of these is an economic good or a free good.

a. A mobile phone.
b. Rainwater used to irrigate food crops
c. Free medicines for the elderly.