Question

There are three groups in our society that makes decisions that affect the allocation of our scarce or limited resources.

A. Name those three groups.

B. What are the four limited resources.

Answer 1

The three groups are:

1) C(onsumption): Households who contribute to the economic fabric via their consumption decision

2) I(nvestment): Firms drive the economy forward with Investment.

3) G(overment expenditure and taxation): The Government which is a centralized entity that guides the path of the economy's development by setting tax rates, and allocating tax money into projects or industries that are deemed deserving of special attention under the circumstance

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The four limited resources are:

1) Labor hours or input

2) Capital e.g. heavy machinery and other mechanical implements that aid in producing output efficiently (at competitive prices)

3) Land: Especially valuable because inelastic supply of this unlike the others - the Earth only has so much land

4) Entrepreneurship: Think of this as the "technology" that makes the utilization of the previous three inputs possible in the production of output.