Economics LAP 14 Economic Resources

Economics LAP 14 Describe types of economic resources. Explain how limited resources affect business. Economic Resources

Describe types of economic resources.

Mindy and Jessica sold lemonade at their yard sale. To sell the lemonade, the girls had to gather some “must-have” items. They needed a variety of resources to be successful.

Items that can be used to produce goods and services Inputs that enable businesses to operate What Are Economic Resources?

Using Economic Resources  As businesses grow, they require more resources.  The resources that businesses use vary.  Producers are responsible for choosing and using the best combination of resources.

Categories of Economic Resources  Natural resources  Human resources  Capital goods

Factors of Production  Economic resources are also known as factors of production.  They enable businesses to produce the goods and services that consumers want.

What Are Natural Resources? Any resources found in nature that are used to produce goods and services

Examples of Natural Resources  Land  Minerals  Energy reserves  Bodies of water  Wildlife and vegetation  Air  Weather conditions

What are Human Resources? People who work physically and/or mentally to produce goods and services

Examples of Human Resources  Real estate agents  Truck drivers  Operations managers  Marketing researchers  Entrepreneurs Antonious Dian Adhy Feryanto, Entrepreneur Feryanto, one of the founders of PT Pavettia Atsiri Indonesia, developed a process to transform natural herbs into essential oil products. His company employs a network of farmers to grow the herbs. For more information about Feryanto, go to

Why Are Human Resources So Important?  Human resources are required in the production of all goods and services.  They combine the other resources to produce goods and services.

What Are Capital Goods? Manufactured or constructed items that are used to produce goods and services

What Makes Capital Goods Different?  Capital goods are created by people.  Human resources use capital goods to transform natural resources from their less satisfactory original state to products that better satisfy consumers.  Capital goods help human resources to be more productive.

Examples of Capital Goods  Equipment  Machinery  Tools  Supplies  Buildings  Trucks  Roads  Ports

Is Money a Capital Good? Although money is needed to run a business, it is not a capital good. Instead, it is financial capital.

Capital Goods and Technology  Capital goods reflect a society’s technology.  Leaders in technology use or have the most up-to-date capital goods.  Developing countries use simple hand tools to produce goods and products.  Industrialized nations use sophisticated industrial and digital technology.

Explain how limited resources affect business.

Limited Resources Natural resources, human resources, and capital goods are all limited.

 Supply problems due to overuse of nonrenewable resources Fossil fuels Minerals  Difficult and costly to obtain  Lack of technology  Unsuitable weather conditions Why Are Natural Resources Limited?

Why Are Human Resources Limited?  Some people are unable or unwilling to work.  There are shortages for certain jobs or professions. Lack of training or skills Lack of interest Changing demographics Geographically unavailable

Why Are Capital Goods Limited? Lack of labor, natural resources, technology, and money to produce them

Find another source Find an alternative resource Conserve the resource Pay a higher price for the resource Responses to Limited Natural Resources

Responses to Limited Human Resources  Offer higher wages  Offer training and retraining  Increase promotions  Find new sources of human resources  Increase automation

Responses to Limited Human Resources  Offer employee-assistance programs  Offer benefits  Offer flextime  Offer shared time

Responses to Limited Capital Goods  Maintain the capital good  Change inventory procedures  Find alternative capital goods  Modify current technology

 What natural resources does your school or employer use?  Human resources?  Capital goods?  What has your school or employer done to make up for shortages in economic resources?

 The VanB plant claims that it supports its community and looks after its workers.  VanB recently replaced 125 employees with automated machinery.  Most local residents are outraged.  They say that VanB shouldn’t have eliminated any of its human resources.  Did VanB act unethically?  Are local residents being unrealistic?