1. Scarcity and Factors of Production
E.1

2. Objectives
Students will explain why scarcity and choice are basic problems of economics.
Students will identify factors of production, including the two types of capital.
Students will explain the role of entrepreneurs.

3. Warm Up: Needs and Wants
Think of the items you use everyday.
Categorize them into needs and wants

4. Needs and Wants Needs: Wants:
Because we can’t have everything we want or need, we have to consider our options

5. How does this play into economics?
Economics is all about the choices that people make
The study of how people seek to satisfy their -needs and wants by making choices

6. BUT… WHY DO WE HAVE TO MAKE CHOICES?

7. SCARCITY Limited quantities of resources to meet unlimited wants.
America is relatively wealthy, so it’s difficult to understand the idea of scarcity
GOODS: physical object (shoes, shirts, etc.)
SERVICES: actions/activities that one person performs for another (haircuts, dental checkups, tutoring, etc.)

8. Goods
Services

9. Scarcity vs. Shortage
Shortages occur when producers will not or cannot offer goods or services at the current prices. (temporary or long-term)
Scarcity always exists because our needs and wants are always greater than our resource supply.
Goods and services are scarce because they are all made from resources that are scarce

10. Factors of Production
Resources that are necessary to produce goods and services

11. Warm-Up
Let’s make a list of resources needed to make this car.

12. Factors of Production
Land
Natural resources

13. Factors of Production Labor
Effort that a person devotes to a task for which that person is paid

14. Factors of Production Capital
Any human-made resource that is used to produce other goods and services (MONEY)
Physical Capital – human-made objects that are used to create other goods and services (capital goods, physical goods )
Human Capital – knowledge and skills a worker gains through education and experience

15. Which of the following is an example of a resource?
Petroleum
A factory
A cheeseburger dinner

16. Which of the following situations represent(s) resource scarcity?
Rapidly growing economies experience increasing levels of water pollution
There is a finite amount of petroleum in the physical environment
Cassette tapes are no longer being produced.

17. Factors of Production
If land, labor, and capital are the essential ingredients for creating all goods and services, who pulls all of these resources together?
Entrepreneurs are ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services – they solve problems; make lives easier

18. Name some Entrepreneurs
Who do you know?

19. Could you be an entrepreneur?
Self-Evaluation

20. Categories
You and your group will go to one of the places of business posted around the room.
You will think about all the resources that business will need and categorize them into
Natural resource
Labor
Capital
Entrepreneurship

21. Entrepreneur Project

22. Exit Ticket On the back of your self-evaluation….
Explain why scarcity and choice are basic problems of economics.
Name the factors of production with an example for each, including the two types of capital
Explain the role of entrepreneurs in economics and why they are important.