AQA GCSE Economics

## The purpose of economic activity **Economic activity** is the production, distribution and consumption of goods and services. It exists because people have **needs** and **wants**. A need is something required to live a healthy and safe life, such as food, clean water, shelter, basic clothing and warmth. A want is something that would make life more comfortable or enjoyable but is not essential to survive, such as a games console, a holiday or a new phone. The line between the two is not fixed. It depends on the person, the country and the time. A phone or an internet connection was a want for most households twenty years ago, yet many people now treat it as close to a need because jobs, schooling and banking depend on it. Income matters too: a wealthy household and a poor one will not draw the line in the same place, and what is a need in a cold climate (heating) may be a want in a warm one. Wants are unlimited, since meeting one tends to produce another, but the resources available to meet them are limited. That mismatch is the starting point for almost everything else in economics. ## The three key economic decisions Every society, whether its economy is planned by a government or left largely to markets, has to settle the same three questions, because it cannot produce everything everyone would like. - What to produce: how much of the limited resources goes into food, housing, healthcare, weapons, entertainment and so on. - How to produce: which methods to use, for…