Economics Concepts and Terms Unit 1

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Relative scarcity

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We do not have enough resources to satisfy all our wants and needs.

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Scarcity

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Insufficiency relative to wants. A universal problem because resources are limited while wants are unlimited.

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Value judgement

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A judgement that implies a personal evaluation or opinion of the desirability or otherwise of a plan of action or an objective.

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Economic system

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The organisational and institutional pattern through which choices are made about which wants to satisfy, and how to allocate resources.

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Recurrent wants

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Wants that are never satisfied and keep recurring, for example, food.

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Competitive wants

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Goods/services that can be substituted for each other, for example, butter and margarine.

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Complementary wants

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Wants that go together, for example, house, furniture, and plants.

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Opportunity cost

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The best alternative opportunity forgone when a choice is made, often referred to as ‘real cost’ or ‘economic cost’.

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Allocative efficiency

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Occurs where a country’s productive resources are used in combinations that generate the maximum benefits for consumers and the country.

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Capital

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The factor of production comprising the stock of human-made resources used to create further goods and services.