2. Starter
What are you going to do tomorrow? What alternatives do you have? What could you do with your time? If you can’t do what you had planned, what is the next best alternative?

3. The Economic Problem and Efficiency
understand the problem of unlimited wants & finite resources – opportunity cost & scarcity
be able to discuss the main economic resources (land, labour capital, enterprise) and the difference between renewable and non- renewable resources

4. Desert Island

5. You are one of 100 people stranded on an island which has sufficient resources to allow you to survive. A terrible event has occurred and as far as you know you are the only people left in the entire world!
Your aim is to make decisions about how you are going to organise yourselves.

6. Decision ONE
An argument has started over some land. One of the group, Khadra, has discovered a place on the island where the soil is particularly fertile and fruit trees abound. She also wants a section of land on which to build a hut – this is near to one of several fresh water supplies which she feels she should control access to (Since she found it). Some people disagree, especially Amy, Jesse and Viren say that no-one should be able to “Own” any of the natural resources.
What is your opinion?
Make a group decision

7. How do you think decisions should be made?
In the early days most decisions seemed easy and just happened without anyone thinking about them. But a member of the group, Shannon, a former company director, is emerging as an influential character and wants to be leader. SHE knows that she’s not the most popular figure but she feels that she has the skills to do the job. Others believe, including Amber, Rebecca and Kirstie, that everyone should have a say in decisions, at least anyone old enough to have an opinion.
How do you think decisions should be made?

8. Decision 3
One member, Darrel used to be a skilled crafts person and has started to make baskets and furniture which he intends to trade for other goods and services. He says that everyone should look after themselves and their families. Others are not happy about this, saying that it will cause division. They want to plan in a communal way with everybody having a say in what should be produced: Everyone should fit in and work for the common good.
So will it be “doing your own thing” or “co-operation” Make your decision.

9. You have decided that Fishing – at least – is a communal activity but arguments are breaking out about sharing the catch. Fred Catchacod works hard and is so skilled that he feels he deserves more than Larry Lazybones who contributes very little. Larry however argues that he simply lacks Fred’s skills and shares similar needs therefore entitling him to his fair share.
How do you think the catch should be shared out – to each according to their need or depending upon skills and effort.

10. You have survived for a year and thoughts are turning to the future (there are 20 children under 10 and 4 new arrivals!) Some say (mainly Isabella, Jay and Seda) that there is no point in having any kind of school system – it would be a waste of resources and should be left to parents. Others (Amy, Jesse and Mina) believe that education is vital and all adults should give up some time to teach the children reading, writing, basic numeracy and practical skills. They accept that this would mean some reduction in production and freedom of choice.
Should scarce resources be used for community schooling or not. How important is education on the island?

11. Limited Resources Unlimited Wants
The Economic Problem?
Limited Resources
Unlimited Wants

12. THE BASIC ECONOMIC PROBLEM
There are only a limited number of resources such as workers, machines, factories, raw materials etc. Yet there are a number of different ways in which the could be used.

13. THE BASIC ECONOMIC PROBLEM
Similarly people only have a limited amount of money. Yet they have lots of needs and wants to satisfy

14. THE BASIC ECONOMIC PROBLEM
Also the Government has a limited amount of money
THE BASIC ECONOMIC PROBLEM – the problem arises because resources are scarce, but human wants are unlimited.

15. The Economic Answers
What goods and services should an economy produce?
How should goods and services be produced?
Who should get the goods and services produced?
Opportunity cost – the benefit lost from the next best alternative

16. Opportunity Cost
With fees and living expenses, it is estimated to cost £50,000 to go to University for 3 years.
What might be the opportunity cost of the £50,000 in fees and living expenses:
To parents if they pay £50,000 on behalf of the children
To students if they have to borrow the £50,000

17. What resources does the UK have available?

18. (resources used in the production process)
Factors of Production
(resources used in the production process)
LAND
LABOUR
FACTORS OF PRODUCTION
CAPITAL
ENTREPRENEURSHIP

19. The inputs into that a firm needs to be successful
Factors of Production
The inputs into that a firm needs to be successful

20. TRANSFORMATION PROCESS
Factors of Production
INPUTS
land
people
capital equipment
materials and components
finance
enterprise
TRANSFORMATION PROCESS
OUTPUTS
goods
services
waste products
ADDS VALUE

21. “Why are some countries so poor and other so rich?”
Discussion:
“Why are some countries so poor and other so rich?”
Factor endowment = the stock of factors of production
The worlds poorest countries generally have few and/or poor quality factor endowments.

22. Factor endowment
Managers have the same problem, what do they want to produce?
What factors of production do they have at their disposal?
Do they have factor endowment?

24. YOUR RESEARCH TASK.... Pick a country
What are the factors of production available to that country?
Give some general stats... (A02)
What impact does that have on that country? (A03)
Evaluate the long term economic growth potential of that country (A04)

25. FACTORS OF PRODUCTION LAND LABOUR CAPITAL ENTREPRENEURSHIP
IMPACT.... (AO2/3)
ECONOMIC GROWTH POTENTIAL (AO4)
COUNTRY:
RM112 BOOKED

26. 4 factors of production and their rewards…