LESSON 20.7 Review 20.7.1
Key knowledge summary Use this dot point summary to review the content covered in this topic. 20.2 Economics and Business concepts and skills
• Resource allocation and decision-making involves the idea of ‘scarcity’. Scarcity is the ‘basic economic problem’, and this involves society having limited resources available to satisfy unlimited needs and wants. • The four main types of economic resources are land, labour, capital and enterprise. • Every choice made involves an opportunity cost, which is the next best alternative given up whenever a choice is made. • All economies must make decisions about how resources will be allocated among producers and what types of goods and services will be produced. This means economies must answer the three economic questions: what to produce? How to produce? And for whom to produce? • Australia is a market capitalist economy, which means that most answers to the three economic questions are made by the market (where buyers and sellers negotiate prices for goods and services). • The four Economics and Business skills that you will develop throughout your course are: • Questioning and researching: This involves posing statements that require answers, particularly in regard to what is known and what is not known, in order to improve your knowledge. Research is important because it allows you to find out what is unknown and contributes to filling in gaps in our knowledge. • Interpreting and analysing: This involves interpreting information to identify the main features or ideas, and then examining the information closely to determine how the parts relate to the whole. • Evaluating, concluding and decision-making: This involves proposing explanations for events or issues and making overall judgements based on the evidence. • Communicating: This involves presenting findings or representing information using an appropriate format to suit a particular audience. The appropriate use of economics terminology and business terminology is very important in this. 20.7.2 Key terms allocate assign resources to different uses within the economy business any activity conducted by an individual or individuals to produce and sell goods and services to make a profit economic scarcity the economic problem of having unlimited needs and wants, but limited resources to satisfy them economic system a way of organising the production and distribution of the nation’s goods, services and incomes economics a social science (study of human behaviour) that analyses the decisions made by individuals, businesses and governments about how limited resources are used to satisfy society’s unlimited needs and wants economy a system established to determine what to produce, how to produce and to whom production will be distributed entrepreneur a person who sets up a business or businesses, taking on financial risks in the hope of profit financial literacy the ability to make informed judgements and to take effective decisions regarding the use and management of money market the place where goods, services or resources are exchanged between buyers and sellers market capitalist economy an economic system that relies on the market to allocate resources based on the actions of consumers and producers, and where resources are generally owned by private individuals and businesses
TOPIC20 Economics and Business concepts and skills 593
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