OCR GCSE Economics - 1.2 - The Basic Economic Problem

Why does scarcity exist?

• Each year workers tend to produce less than previously

• Machines wear out in time

• There are not sufficient resources to meet everyone's wants

• There is a limit to people's wants

Why will scarcity continue to be a problem in the future?

• Prices will rise

• Resources will always be finite

• Needs will decrease in the future

• World population will fall

Define opportunity cost

• The value forgone from all other alternatives

• The value forgone from the next two best alternatives

• The value forgone from the next best alternative

• The value gained from choosing a good or service

A need is

• Something we have to have in order to survive

• Something we have to have to make our life better

A want is

• Something we have to have in order to survive

• Something we would like to have to make our life better

The difference between a good and a service is that:

• Goods are available in unlimited quantities and services are not

• Goods are tangible and services are not

• Services are available in unlimited quantities and goods are not

• Goods help satisfy unlimited wants and services do not

What is the basic economic problem?

• The value forgone from the next best alternative

• The fact that the world has finite resources but humans have infinite wants

• Too many resources

• The fact that the world has infinite resources but humans have finite wants

Which of the below is not a scarce resource?

• Oil

• Sea water

• Natural gas

• Gold

Suppose you have a £20 Apple gift car, with which you can buy (download) songs or videos. Songs cost £1 each and videos cost £2 each. What is the opportunity cost of one video?

• It is constant and equal to 1/2 song

• It is constant and equal to 2 songs

• It is £1

• An increase in cost as more videos are purchased