1. 1st 9wks Unit 1 – Notes EF 1-1 I. Basic Terminology
A. Economics: the study of how Scarce (limited) Resources are used to satisfy human wants
a. There are consequences when people use resources
b. Economics studies the causes and effects of the choices people make when they
use resources
c. Economics can involve individuals a group of people, businesses, or countries
Available Resource - Chocolate
Unlimited Wants - Chocolate

2. B. Choices usually involve two things:
a. Need – something a person must have to survive
Examples: ____________________________________

3. C. The things people want and need are basically divided into 2 categories:
a. Goods - things, physical objects
Examples: ________________________________________
b. Services - some action that someone does for someone else
Examples: ________________________________________

4. What is the basic problem in economics? What is economics about?
a) Scarcity - there are Not Enough resources to meet our
Unlimited wants
* In other words, there is not enough stuff to give people everything they want
b) How does it relate to economics? Because things are scarce and you can’t have everything, you constantly have to choose what you want to buy or do

5. F. Is shortage the same thing? No!
D. What is the basic problem in economics? Scarcity
E. Scarcity will (ALWAYS, SOMETIMES, NEVER) exist. Circle the correct answer in ( )
F. Is shortage the same thing? No!
a. Shortage - when the quantity (amount) of a product available is not enough to meet the
current demand
Example: _________________________________________
G. What is the difference between a shortage and scarcity? Shortages are temporary

6. H. Factors of Production - all of the things used to produce goods or
services
I. 4 Factors of Production
1 - Land - any Natural Resource used to produce goods and
Examples: _________________________

7. 2 - Labor - any action a person performs that he or she gets paid
Examples: __________________________

8. 3 – Capital - any man-made resource used to make
goods and services
Examples: __________________________

9. 4 – Entrepreneur – a “person who organizes, manages,
and assumes the risk of a business”
..uses the Factors of Production

10. Factors of Production
Land Labor Capital Entrepreneur

11. * There are three types of capital:
a) Physical capital – stuff, physical objects
Examples: ________________________

12. b) Human capital – skills and knowledge that a worker has
Examples: ____________________________________

13. c) Financial capital - Money used for financial purposes --
used by entrepreneurs and businesses to buy what they need to make their products
or to provide their services to the sector of the economy upon which their operation
is based