Scarcity and the Factors of Production In this lesson, students will be able to define the following key concepts: Scarcity Economics The Factors of Production Entrepreneur E. Napp

In a magical world, there is no need for Economics but we live in a world of Scarcity. We need Economics. E. Napp

Scarcity Scarcity is the realization that our wants and desires are unlimited but the world’s natural resources are limited. In other words, we always want more than we have. We cannot wave a magic wand to get everything we desire. E. Napp

Wouldn’t it be nice if we could just wave the magic wand and multiply our dollars? E. Napp

Economics Due to scarcity, we cannot have everything we want or need. Therefore, we have to make choices. Economics is the study of the choices we make. E. Napp

Which will you choose in a world of limited resources? E. Napp

The Factors of Production Whenever we make a good (an object) or a service (an action performed), we need the Factors of Production. The Factors of Production are: Land ( Natural Resources) Labor (Paid Workers) Capital (Money and Machines)

Resources that are used to make all goods and services Land →all natural resources used to produce goods and services. Labor →effort made by a person for which they get paid for. Capital →physical capital: buildings and tools →human capital: knowledge and skills 8

Name the Factor of Production addressed in this diagram.

Entrepreneur An entrepreneur is a person who puts together land, labor, and capital to make new businesses. If your mother opened her own business, she is an entrepreneur. Bill Gates is also an entrepreneur.

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Questions for Reflection: Define scarcity. Explain how scarcity affects your daily life. What is Economics? Describe the Factors of Production. Why would someone/you want to be an entrepreneur? Explain your answer.