Theory question 106
Basic ConceptsSection B: answer four questions only from this section.
Distinguish between (a) Economic resources and non-economic resources (b) Want and Demand (c) Money Cost and Real Cost.
Show the model answer
(a) Economic resources are scarce and command a price (e.g. land, labour, capital, machines); non-economic (free) resources are abundant and have no price (e.g. air, sunlight)
(b) A want is a desire for a good or service, whether or not one can pay; demand is the quantity of a good that people are willing and able to buy at a given price over a given period (want backed by purchasing power)
(c) Money cost is the amount of money spent to obtain or produce something; real (opportunity) cost is the alternative given up in making the choice
For each pair, define both terms and show the difference.