★ Must-know
📌 Economists study demand and supply and the importance of reconciling them in markets.
Further detail
📌 Actual demand and supply refer to currently realised market quantities, whereas potential demand and supply refer to possible quantities that could arise.
Unlimited wants versus limited resources
📌 Rational economic decision making requires doing more when marginal cost is less than marginal benefit and doing less when marginal cost is greater than marginal benefit.
1. What is the central economic problem created by resources being limited relative to human wants?
2. Which set contains the main categories of economic resources, also called factors of production?
3. Why do economists examine both demand and supply in markets?
What is scarcity in economics?
Scarcity is the central economic problem from limited resources versus human wants.
What are economic resources also called?
Economic resources are also called factors of production.
Which items are included as economic resources?
Labour, land and raw materials, and capital are economic resources.
What do economists study to understand markets?
Economists study demand and supply and their reconciliation in markets.
What does actual demand and supply refer to?
Actual demand and supply refer to currently realised market quantities.
What does potential demand and supply refer to?
Potential demand and supply refer to possible quantities that could arise.
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