/IB-Economics

A list of IB economics terms and definitions

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IB-Economics

A list of IB economics terms and definitions

Introduction

Goods

Goods are physical objects that people need and want

Services

Services are non-physical activities that people need and want

Resources / Factors of Production

Resources or Factors of Production are the inputs used to produce services that people need and want

Scarcity

A situation where factors of production are finite, while wants are infinite. So that there are not enough resources to produce everything we need and want. (Insufficient Factors of Production)

Economics

Economics is the study of choices leading to the best possible use of scarce resources in order to best satisfy the unlimited human needs and wants

Three Basic Economic Questions

  • What to Produce?
  • How to Produce?
  • For whom to Produce?

Resource Allocation

Resource Allocation refers to assigning the available resources to specific uses, chosen among many alternatives

  • Reallocation(of resources): Changing the amount of a certain good produced
  • Overallocation(of resources): One good being produced too much
  • Underallocation(of resources): One good being produced too less

Factors of Production

Land

Land includes