Choice | Consumer | Economic Goods | Free Goods | Goods | Limited Means | Opportunity Cost | Scarcity | Service | The basic economic problem | The real cost of a decision | Wants | Why can individuals not have everything they want
Describe how an individuals means may be augmented by family (whanau).
Providing meals (food), providing a service (e.g. a family member is a builder or plumber), giving a loan, setting up a trust fund.
Which of the following situations will have an opportunity cost? (i) A student decides to work full time. (ii) A family goes on an overseas trip rather than buying a second car. (iii) A free lunch at a brewery opening.
All of the situations have an opportunity cost because when a choice (decision) is made between alternatives there will always be a next best alternative foregone (a second ranked alternative will be missed out on).
Who has unlimited means?
Nobody. All the world's population faces the problem of limited (finite or scarce) means, that of time, income and skill. Time is limited whether you are poor or wealthy. There are only 24 hours in a day and time spent on one activity can-not be spent on another activity. Income (money) is a limited means for all people because money spent on one item cannot be used to buy something else at the same time. There is a finite amount of money that people have or earn, meaning that even the rich cannot have everything they want. Everyone has skills but no one person is good at everything, so the skills that an individual possesses are limited. Therefore, no one has unlimited means (everyone has limited means).
What is the economic term that describes the next best alternative foregone when a decision is made?
What is meant by the term consumer goods?
Goods that are sold to people for their own private or immediate use.
Man-made goods use in the production of other goods and services are termed:
Capital goods. Capital (producer) goods are man-made goods used in the production of other goods and services, for example, tools, machinery.
Explain how a want is different from a need.
Idea that a need is essential for survival while a want is a desire that is not required by an individual to survive.