1. Chapter 2 Economic Resources and Systems

2. Objectives After completing this section, you’ll be able to: 1. Define Scarcity. 2. List the four factors of production.

3. Factors of Production Natural Resources Human Resources Capital Resources Entrepreneurial Resources

4. Factors of Production A shortage of resources is called scarcity. A basic economic problem for any society is how to manage its resources.

5. Factors of Production To meet the wants and needs of its people, a society must produce goods and services using their economic resources. When economic resources are actually used to produce goods and services they become factors of production.

6. Natural Resources The raw materials found in nature are called natural resources

7. Natural Resources When do natural resources become factors of production? When we use them to produce goods.

8. Natural Resources The economy of many countries is based on their natural resources.

9. Natural Resources Some resources are renewable. They can be reproduced. What are some examples? Other resources are limited, or nonrenewable. Oil, coal, etc.

10. Natural Resources The amount of natural resources available to a society has a direct effect on its economy.

11. Human Resource The knowledge, efforts, and skills people bring to their work are called human resources, or labor.

12. Human Resource Labor can be skilled or unskilled, physical or intellectual. One of the biggest problems facing many nations today is not a shortage of labor but a shortage of skilled labor.

13. Capital Resources Capital resources are the things used to produce goods and services, like buildings, materials, and equipment.

14. Entrepreneurial Resources Meeting the changing wants and needs of people requires entrepreneurial resources.

15. Entrepreneurial Resources Entrepreneurs improve on ways to use resources, or create and produce new ones. A key to dealing with scarcity is to develop new resources and technologies.

16. What is scarcity? What are the four factors of production ? Fast Review

17. Making Decisions About Production No society has enough productive resources available to produce everything people want. Every society must, therefore, make choices.

18. Basic Economic Questions A society makes economic choices by answering three economic questions : 1.What should be produced? 2.How should it be produced? 3.Who should share in what is produced?