economics Study of the choices people make when faced with scarcity

scarcity Unlimited wants with limited resources

ANYTHING YOU DO NOT HAVE!!! What is scarce ? ANYTHING YOU DO NOT HAVE!!!

Resources are “scarce”. There are not enough. AGREE OR DISAGREE? Resources are “scarce”. There are not enough.

RESOURCES ARE SCARCE

Needs vs. Wants survival like or desire Water Coke Food Pizza Hut Shelter mansion Clothing Abercrombie

Need or Want? Chocolate milk Milk for a newborn baby Hairspray Toothpaste Shelter during winter Car Ipod water

3 Basic Economic Questions 1. What to produce? 2. How to produce? 3. For Whom to produce?

Factors of Production What went into making this? 9

What went into this? Rubber (from Malaysia) machines metal Someone who put all of this together. wood graphite 10

4 Categories of Productive Resources (Factors of Production) LAND LABOR CAPITAL ENTREPRENUERSHIP Natural, renewable resources wood, rubber, graphite, land, animals Human resources, people MENTAL and PHYSICAL A produced good used in the prduction of another good Machines, computers, buildings, etc The person or group responsible for putting the other 3 together to produce something 11

Factors of Production Land: includes not only property on which a production plant is built, but all other natural resources. (land, forests, water resources, oil) 2. Labor: is the contribution of human workers to the production process. (school teachers, janitors)

Factors of Production 3. Capital: refers to all the structures and equipment involved in the manufacturing process. (machinery storage, transportation) 4. Entrepreneurship: is a specific form of labor. A risk-taker in search of profits who does something new with existing resources.

Draw picture to represent Human Resources List examples Natural Resources: List examples Draw picture to represent Human Resources List examples Capital Resources Entrepreneurship Think of a product

How are scarce resources allocated? Our economic system allocates resources by price.