SCARCITY & FACTORS OF PRODUCTION CHAPTER 6

WHY DO WE CARE ABOUT THE ECONOMY? You live in a DEMOCRACY You influence the gov’t through VOTING and ACTIVE CITIZENSHIP If you don’t know what is going on, or do not understand it, you won’t know what is best to help your QUALITY OF LIFE. You are a Consumer What is available to you to buy is based on how Canada’s economy allocates resources. Through your actions, you can make Canada the best place to be!

ECONOMY DEFINED CAN BE DESCRIBED AS: The resources and processes involved in the production, distribution, and consumption of goods and services.

TEXTBOOK PG. 199-201

Because WANTS are UNLIMITED and RESOURCES are LIMITED! I need new pom-poms! Meet the Normal Family: I want a new snowboard! Don’t these kids know that money doesn’t grow on trees?! Just like the girl in the comic, This family has an ECONOMIC PROBLEM! WHY? Because WANTS are UNLIMITED and RESOURCES are LIMITED!

ALL SOCIETIES FACE THE SAME ECONOMIC PROBLEM: SCARCITY UNLIMITED WANTS LIMITED RESOURCES THERE ARE NEVER ENOUGH RESOURCES IN A SOCIETY TO SATISFY ALL THE PEOPLE’S WANTS, THEREFORE A SCARCITY OF RESOURCES ALWAYS EXISTS

HOW SOCIETIES DEAL WITH SCARCITY? The distribution of scarce resources (scarcity) is the basic economic problem faced by all societies. Societies must make choices about the limited resources available to them and decide how to distribute the resources to meet the wants.

THE THREE BASIC ECONOMIC QUESTIONS ALL SOCIETIES MUST CONSIDER 1.WHAT goods and services to produce 2. HOW goods and services will be produced 3. FOR WHOM goods and services will be produced Unlimited WANTS THEREFORE, SOCIETIES MUST MAKE CHOICES: SCARCITY Limited RESOURCES

SCARCITY ACTIVITY Get yourselves into groups of 3-5 While sailing in the Pacific Ocean your ship went down and your group has been stranded on a deserted island. You must survive for 2 weeks while you wait to be rescued. Follow the tasks in your Duotang to help you survive….Today’s class is about one thing...establishing everything you need to survive.

SCARCITY ACTIVITY - REFLECTION What items did you choose from the list? Why? Which items did you find to be most useful? Was your group close to being out of resources or items at any time? Which items turned out to be necessities? Which ones luxuries? Did trade play a big part in your game? Why or why not? If you could start over, what would you do differently?

WHAT CAUSES LIMITED RESOURCES? FACTORS OF PRODUCTION WHAT CAUSES LIMITED RESOURCES?

WHAT LIMITS SUPPLY OF RESOURCES? We recall that scarcity is the result of Societies Unlimited Wants being restricted by the limited resources with which we have. But, what causes this limitation of resources?

FACTORS OF PRODUCTION The Factors of Production(FOP)are what cause that limitation of resources. They are: Land, Labour, Capital These FOPs are combined to produce the GOODS and SERVICES to meet societies wants. You need all three in order to produce goods and services Land = Natural Resources Labor = Human Resources Capital = Capital Resources

LAND All natural resources and raw materials used in the creation of products. Includes renewable and non-renewable resources. What impacts might this decision about using the land have on the land?

LABOUR The human resource or people and their skills and knowledge (physical and mental effort) that help create the goods or provide the service.

CAPITAL The capital resources which includes money or anything that can be used as collateral to get money (property, rare metals, etc.) Goods used to make more goods and services are also Capital Resources (Factories, tools, etc)

EXAMPLE In a landscaping business, the factors of production could be broken down as follows: Land: The grass, mulch, dirt, and flowers used. The wood and metal used to make the tools. Labor: The landscaper (equipped with specialized knowledge about the trade). Capital: The shovels, rakes, mowers, and trucks as well as the wages to pay labor. How about our Marooned activity? What were the FOPs there?

TO REVIEW: Land + Labour + Capital = Factors of Production (FOP) A LIMITED SUPPLY of any RESOURCE (or FOP) is called SCARCITY.   EVERY society deals with SCARCITY. The way a society deals with scarcity defines its ECONOMIC SYSTEM. (more on this later)! Other words for SCARCITY? Shortage Deficit Shortfall Decreased Amount Rare Few Limited Not Enough Stuff!

REVIEW ACTIVITY To ensure understanding – please complete the following worksheet correctly placing the items under the appropriate Factor of Production