IB Economics 1.1.2 the Problem of Choice Key Definitions

Human-made factors of production used to produce goods and services.

The unique human skills held by some individuals, including the ability to innovate, take business risks, and pursue new opportunities for running a business.

All resources or inputs used to produce goods and services.

Investments in financial instruments, or the funds used to purchase financial instruments. A capital factor of production.

When a government alters the resource allocation that markets would have achieved working freely on their own.

Skills, abilities, good health, and knowledge utilized by people to increase their productivity.

All the physical work and mental skills that humans put into the production of goods and services.

All natural resources on Earth, including farmland and non-farmland. All the natural resources found below and above the ground.

The value of the next best option that must be forgone or sacrificed in order to acquire something else.

Capital factors of production used to produce more goods and services in the future.

Assigning available resources or factors of production to particular uses selected from various possible options.

The idea that available resources (land, labour, capital, entrepreneurship) are limited and unable to satisfy unlimited human needs and wants.

Using resources in a way that meets current needs without compromising the ability of future generations to meet their own needs.