1. Scarcity and the Factors of Production

2. Scarcity: Basic Economic Problem
Lack of enough resources to satisfy our wants
Affects every person, business, government and society.
Human wants > Limited resource = SCARCITY

3. V. V.

4. Wants Are Unlimited:
Scarcity exists b/c people’s wants are never satisfied
Economic Good:
any item that is scarce
Economic Bad:
an item we would pay to have less of
to “make scarce”

6. Resources are Limited:
Resources = FACTORS OF PRODUCTION
LAND:
All “natural” resources
Water, forests, wildfire, minerals, gas, and oil.
Owners of land receive RENT

7. 1. LAND

8. 2. LABOR
Includes all the time, effort, and talent that goes into production
Physical/Intellectual service: training, education, and abilities of people in society.
People who provide LABOR are paid a WAGE.

9. 2. LABOR

10. 3. CAPITAL
All resources made/used by people to help produce and distribute goods and services.
Machinery and Equipment (used in production)
Owners of Capital receive: INTEREST

11. 3. CAPTIAL

12. 4. ENTREPRENEURSHIP
Rare Combo: Vision, ingenuity, energy, and willingness to take risks needed to run a new business.
RISKTAKERS: Time, money, energy in hopes of profits (from satisfying consumer wants)

13. 4. ENTREPRENEURSHIP Fred DeLuca
-Borrowed $1,000 from friend (partner Peter Buck)
to start sub-shop to pay for college