A need: A good or service essential for living.
A want: A good or service that people would like to have, but which is not essential for living.
Economic problem: Unlimited wants but limited resources – this creates scarcity.
Scarcity: Lack of sufficient products to satisfy the total wants of the population.
Opportunity cost: The next best item given up choosing another.
Factors of production: Resources needed to produce goods and services – land, labour, capital and enterprise.
Business: An organization that combines factors of production to make goods and services to satisfy people’s wants and needs.
Specialisation: People and businesses concentrate on what they are best at.
Division of labour: Production is split into separate tasks and each worker specializes in one task.
Added value: The difference between a product’s selling price and the cost of bought in materials.