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Economics: All Topics
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Cambridge IGCSE Economics
Economics: All TopicsComplete deck
01·1.1 The nature of the basic economic problem
What is the basic economic problem?
Answer
Finite resources cannot satisfy people's unlimited wants, so choices about resource use must be made.
02·1.1 The nature of the basic economic problem
What does scarcity mean in economics?
Answer
There are insufficient resources to satisfy all human wants.
03·1.1 The nature of the basic economic problem
What are finite resources?
Answer
Resources available only in limited quantities, such as land, labour and machinery.
04·1.1 The nature of the basic economic problem
What are infinite wants?
Answer
People's desire for goods and services is unlimited, even though resources are limited.
05·1.1 The nature of the basic economic problem
Why is scarcity unavoidable?
Answer
Human wants are unlimited, but the resources used to meet them are finite.
06·1.1 The nature of the basic economic problem
What are economic resources?
Answer
Inputs used to produce goods and services, including land, labour, capital and enterprise.
07·1.1 The nature of the basic economic problem
What is a want?
Answer
Something a person would like to have, whether or not it is essential for survival.
08·1.1 The nature of the basic economic problem
What is a need?
Answer
Something essential for survival, such as basic food, water or shelter.
09·1.1 The nature of the basic economic problem
Does scarcity affect wealthy countries?
Answer
Yes. Even wealthy countries lack enough resources to satisfy everyone's wants.
10·1.1 The nature of the basic economic problem
How does scarcity affect a consumer?
Answer
A consumer has limited money or time and cannot obtain every good or service they want.
11·1.1 The nature of the basic economic problem
How does scarcity affect a worker?
Answer
A worker has limited time and must choose how to divide it between working, training and leisure.
12·1.1 The nature of the basic economic problem
How does scarcity affect a firm?
Answer
A firm has limited labour, capital and materials, so it cannot produce unlimited output.
13·1.1 The nature of the basic economic problem
How does scarcity affect a government?
Answer
A government has a limited budget and resources, so it must prioritise public spending.
14·1.1 The nature of the basic economic problem
Why does scarcity make choice necessary?
Answer
Scarce resources have alternative uses; using them for one purpose limits their use for another.
15·1.1 The nature of the basic economic problem
What is meant by allocating scarce resources?
Answer
Deciding how limited inputs should be distributed among different uses.
16·1.1 The nature of the basic economic problem
Why does a larger national income not eliminate scarcity?
Answer
Higher income can raise what is produced, but wants can still exceed available resources.
17·1.1 The nature of the basic economic problem
Explain why a country with abundant oil can still face scarcity.
Answer
Oil may be plentiful, but labour, capital, time and other resources remain limited relative to wants.
18·1.1 The nature of the basic economic problem
A hospital has more patients than available staff and beds. Identify the economic problem.
Answer
Scarcity: limited medical resources cannot meet all demand for treatment.
19·1.1 The nature of the basic economic problem
A firm receives more orders than it can produce with its existing machinery. Explain the constraint.
Answer
The firm's productive resources are finite, so it must choose how to use its limited capacity.
20·1.1 The nature of the basic economic problem
Why is scarcity not simply a lack of money?
Answer
Scarcity concerns all limited productive resources, including time, natural resources and labour, not just finance.
21·1.1 The nature of the basic economic problem
How can rising population intensify the basic economic problem?
Answer
More people may increase demand for housing, water and services faster than productive resources expand.
22·1.1 The nature of the basic economic problem
Can technological progress completely solve the basic economic problem?
Answer
No. It can raise productive capacity, but resources remain finite and human wants continue to grow.
23·1.1 The nature of the basic economic problem
What are the three basic economic questions?
Answer
What to produce, how to produce and for whom to produce.
24·1.1 The nature of the basic economic problem
What does 'what to produce' mean?
Answer
Choosing which goods and services an economy should make and in what quantities.
25·1.1 The nature of the basic economic problem
What does 'how to produce' mean?
Answer
Choosing the resources and production methods used to make goods and services.
26·1.1 The nature of the basic economic problem
What does 'for whom to produce' mean?
Answer
Deciding who receives or can consume the goods and services produced.
27·1.1 The nature of the basic economic problem
A government chooses hospitals rather than sports facilities. Which question is this?
Answer
'What to produce': it is deciding which services to prioritise.
28·1.1 The nature of the basic economic problem
A factory chooses robots instead of extra workers. Which question is this?
Answer
'How to produce': it is choosing a more capital-intensive production method.
29·1.1 The nature of the basic economic problem
A firm decides to make affordable rather than luxury bicycles. Which question is central?
Answer
'What to produce': it is selecting the type of bicycles to supply.
30·1.1 The nature of the basic economic problem
A business sells mainly to high-income customers. Which question does this illustrate?
Answer
'For whom to produce': the output is targeted towards a particular group of consumers.