The Economic Problem andEconomic Systems

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GCSE Economics Revision Notes

The Economic Problem

and

Economic Systems

The Economic Problem

Economics is a social science which studies how humans behave when faced by the economic problem of scarcity.

Economic problem = human wants for goods and services are unlimited, but resources for producing goods and services to satisfy the wants are limited.

Reasons for unlimited wants include

* Most goods wear out over time and need replacing - eg food, clothes, furniture

* New goods and services are invented creating new wants - eg personal computers, games consoles

* Human greed

Resources at any moment in time are limited because of the restrictions of the Earth.

Renewable resources = resources that can be replaced (eg vegetation and people).

Non-renewable resources = resources that can only be used once and will ultimately run out (eg fossil fuels, mineral ores). Some of these resources can be recycled.

Free good = a good that is not scarce, so is available in sufficient quantity to satisfy all human wants (eg air).

If all goods and services are free, the economic problem