Needs, Wants, and How to Meet Them:

Today’s Learning Goals Explain the difference between wants and needs. Distinguish between goods and services. Describe the types of economic resources.

Needs and Wants We all have lots of desires to buy or have things… some are essential to live, some are not… Needs: things required in order to live Examples: air, water, food, shelter, etc. Wants: Things that add comfort or pleasure to life, but are not essential Examples: cell phone, car, CD’s

Need…or Want??? Some items may be difficult to classify as a need or a want. Is a steak dinner a need or want? You need food to live…but it doesn’t have to be as nice as a steak dinner… In our culture, most purchases do more than meet just our basic needs

Goods and Services People satisfy their needs and wants by purchasing and consuming goods and services. Goods are tangible things you can see and touch Examples: food, a car, new shoes Services are intangible activities that use mostly labor to meet needs or wants Examples: a maid, a doctor, a lawyer

Good, Service, or Both??? Some items are clearly a good or service, but sometimes its hard to tell… When you get your oil changed at Jiffy Lube, are you getting a good or a service? You get new oil in your car = Good Someone does the work for you = Service Some things you purchase will provide you with a good and a service all at once

Consumers and Producers Economics is the study of producing goods and services to satisfy the needs and wants of consumers Producer: anyone who creates (produces) a good or service Consumers: individuals who purchase goods or services

Economic Resources How do producers create goods and service to offer for sale? Economic Resources are the means through which goods and services are produced Economic resources are also called factors of production There are 3 main factors of production, and one extra that ties the others together…

Factor 1: Natural Resources Nature supplies raw materials necessary to make things These raw materials are called Natural Resources Example: Chicken noodle soup contains chicken meat, spices, water, and vegetables, all of which came from the nature

Factor 2: Human Labor Human effort used to produce goods and services is called labor Labor can be physical or mental Example: to the soup, farmers raise the animals and crops, a truck driver drives them to a factory, and workers operate machinery to mix and can it (physical labor) Someone has to design the machines, and think of a recipe for the soup (mental labor)

Factor 3: Capital Resources Producing goods and services requires tools and equipment The buildings, machines, supplies, etc. used to produce are called capital resources, or capital goods Examples: the truck used to drive to the factory, the machines used to can the soup, and the factory building itself

Entrepreneurship: The 4th Factor Making the other 3 factors of production into something useful often takes creativity and some risk Entrepreneurship is the factor of production that ties the others together Examples: Someone has to decide what to name the soup, where to sell it, and how much to charge

Questions to Ponder… Which of the 4 factors of production do you think is the most important? Explain why. What kinds of things happen when a country/business has less of one factor of production than another Classify each of these items with the correct factor of production Cookie Mix Eggs Spatula Price Plan Cookie sheet You mixing dough

Wrapping Up… Consumers purchase goods and services from producers to meet their wants and needs Producers use factors of production to meet the needs and wants of consumers It takes natural resources, human labor, capital goods, and risk & creativity to provide for consumers