1. Scarcity & Factors of Production
Chapter 6

2. Why do we care about the economy?
You live in a DEMOCRACY
Eventually, you will get the opportunity to tell the gov’t how you think things should be done 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 can make Canada the best place to be!

3. You are a consumer
What is available to you to buy is based on how Canada’s economy allocates resources.

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

5. Textbook pg

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

7. SCARCITY ALL SOCIETIES FACE THE SAME ECONOMIC PROBLEM: 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

8. HOW SOCIETIES DEAL WITH SCARCITY
Societies and the people in them must make CHOICES about the limited resources available to them and decide how to ALLOCATE the resources to meet the wants.
THE ALLOCATION OF SCARCE RESOURCES (SCARCITY) IS THE BASIC ECONOMIC PROBLEM FACED BY ALL SOCIETIES

9. THE FOUR 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
HOW MUCH is
to be produced and HOW FAST
Unlimited
WANTS
THEREFORE, SOCIETIES MUST MAKE CHOICES:
SCARCITY
Limited
RESOURCES

10. What limits supply? The FACTORS OF PRODUCTION (FOP)!!
Land, Labour, Capital
They are combined to produce GOODS and SERVICES
You need all three in order to produce goods and services
NATURAL RESOURCES = LAND
HUMAN RESOURCES = LABOUR
CAPITAL RESOURCES = CAPITAL

11. 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?

12. Labour
HUMAN RESOURCES: people and their skills and knowledge (physical and mental effort)

13. Capital
CAPITAL RESOURCES: 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)

14. 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.

15. Combined! CAPITAL LABOUR LAND
ALSO CALLED “HUMAN RESOURCES” EFFORTS PEOPLE MAKE TO PRODUCE GOODS
ALL MONEY USED TO PURCHASE, MAINTAIN MACHINES, FACTORIES, COMMUNICATIONS ETC, AND EQUIPMENT
ALSO CALLED “NATURAL RESOURCES”
SOIL, WATER, MINERALS ETC.

16. To Review: LAND + LABOUR + CAPITAL = 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.
Other words for SCARCITY?
Shortage
Deficit
Shortfall
Decreased Amount
Rare
Few
Limited
Not Enough Stuff!

17. Activities One Complete the FOP handout Two TV show:
Recess from the Disney Channel