1. Scarcity and the Factors of Production

2. What is Economics?
Economics is the study of how people makes choices to satisfy their needs and wants.
The basic problem is limited resources to meet unlimited wants

3. Scarcity and Economics
A scarcity occurs when there is limited quantities
The needs or desires are unlimited
Once the resource is gone, it is gone for good
Thus you can’t always get what you want

4. Shortage
Shortage occurs when goods or services are no longer available to the current prices
The shortage will eventually be replaced
The laws of supply and demand are used to understand shortages

5. The Factors of Production
There are three factors of production
Land
Labor
Capital

6. Land All natural resources that are used to produce goods and services
Fertile land for farming
Products in or on the land

7. Labor
Any effort a person devotes to a task for which that person is paid
Medical aid provided by a doctor
Tighten of a clamp by a production line worker
Repair of a television

8. Capital
Any human-made resources that is used to create other goods and services
Capital can be:
Physical and Human

9. Physical Capital Human-made objects to create other goods and services
Building
Tools

10. Human Capital People investing in themselves
Knowledge and skills gained
These are gained through education and experience

11. Factors of Production in Action
Land
Popping Corn
Vegetable Oil
Labor
The human effort needed
to pop the corn
Capital
Corn-Popping Device

12. Entrepreneurs
They are ambitious leaders who decide how to combine the factors of production
They take risks to develop original ideas, start businesses, create industries, and fuel the economy
Steve Jobs
Steve Ellis