1. Scarcity and the Factors of Production
Economics
Scarcity and the Factors of Production 1

2. Study of Economics
Economics is the study of how people seek to satisfy their needs and wants by making choices.
Why? 5

3. Scarcity
Scarcity refers to the fact that there is a limited quantity of almost all things that people want
Scarcity is at the heart of economics – if there were no scarcity, there would be no need for economics
Sooner or later a limit is reached 7

4. Scarcity
Goods are any physical items or objects that are desired by people – most goods are available in scarce quantities
Services are actions or activities that a person performs for someone else 7

5. Scarcity vs. Shortage
A shortage occurs when producers cannot offer goods or services at the current prices
Shortages can be temporary or long-term
Droughts, wars or worker strikes can produce shortages 7

6. Factors of Production Land - Natural Resources
Labor - Skills of People
Capital - Goods Used To Make Other goods, but not money
Physical: Buildings or tools
Human: Knowledge or skills 10

7. Who makes Resources into Goods?
Entrepreneurs: a leader who combines land, labor and capital into marketable goods and services
They take risks to develop ideas, start businesses and create industries for the main reason of profit
Bill Gates