Scarcity and Factors of Production E.1

Objectives Students will explain why scarcity and choice are basic problems of economics. Students will identify factors of production, including the two types of capital. Students will explain the role of entrepreneurs.

Warm Up: Needs and Wants Think of the items you use everyday. Categorize them into needs and wants

Needs and Wants Needs: Wants: Because we can’t have everything we want or need, we have to consider our options

How does this play into economics? Economics is all about the choices that people make The study of how people seek to satisfy their -needs and wants by making choices

BUT… WHY DO WE HAVE TO MAKE CHOICES?

SCARCITY Limited quantities of resources to meet unlimited wants. America is relatively wealthy, so it’s difficult to understand the idea of scarcity GOODS: physical object (shoes, shirts, etc.) SERVICES: actions/activities that one person performs for another (haircuts, dental checkups, tutoring, etc.)

Goods Services

Scarcity vs. Shortage Shortages occur when producers will not or cannot offer goods or services at the current prices. (temporary or long-term) Scarcity always exists because our needs and wants are always greater than our resource supply. Goods and services are scarce because they are all made from resources that are scarce

Factors of Production Resources that are necessary to produce goods and services

Warm-Up Let’s make a list of resources needed to make this car.

Factors of Production Land Natural resources

Factors of Production Labor Effort that a person devotes to a task for which that person is paid

Factors of Production Capital Any human-made resource that is used to produce other goods and services (MONEY) Physical Capital – human-made objects that are used to create other goods and services (capital goods, physical goods ) Human Capital – knowledge and skills a worker gains through education and experience

Which of the following is an example of a resource? Petroleum A factory A cheeseburger dinner

Which of the following situations represent(s) resource scarcity? Rapidly growing economies experience increasing levels of water pollution There is a finite amount of petroleum in the physical environment Cassette tapes are no longer being produced.

Factors of Production If land, labor, and capital are the essential ingredients for creating all goods and services, who pulls all of these resources together? Entrepreneurs are ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services – they solve problems; make lives easier

Name some Entrepreneurs Who do you know?

Could you be an entrepreneur? Self-Evaluation

Categories You and your group will go to one of the places of business posted around the room. You will think about all the resources that business will need and categorize them into Natural resource Labor Capital Entrepreneurship

Entrepreneur Project

Exit Ticket On the back of your self-evaluation…. Explain why scarcity and choice are basic problems of economics. Name the factors of production with an example for each, including the two types of capital Explain the role of entrepreneurs in economics and why they are important.