1. Scarcity and the Factors of Production

2. Scarcity and Choice  Need- something like food, air, shelter, water (necessary for survival)  Want- item we desire—not essential to survival  CANT HAVE EVERYTHING YOU NEED OR WANT—YOU HAVE TO MAKE CHOICES!!  Economics- study of how people seed to satisfy their needs and wants by making choices.

3. Scarcity  Goods- physical objects such as shoes and shirts, cars, or chairs.  Services- actions or activities that one person performs for another… such as haircuts, dental checkups, and tutoring.

4. Scarcity vs. Shortage  Scarcity- implies limited quantities of resources to meet unlimited wants.  ALL GOODS AND SERVICES PRODUCED ARE SCARCE.  Shortage- occurs when producers will not or cannot offer goods or services at current prices.  Can be long-term or short-term.  Holiday seasons  Wars and droughts

5. Factors of Productions  Land  Labor  Capital  Physical Capital  Human Capital  Entrepreneur

6. Land  All natural resources used to produce goods and services  Natural resources are found in nature.  Can include farmland, products on the land (coal, water, forests).

7. Labor  The effort that a person devotes to a task for which that person is paid.  Can include medical aid provided by a doctor, a painting created by an artist, or the repair of a TV.

8. Capital  Any human-made resource that is used to produce other goods and services.  Physical Capital- Human-made objects used to create other goods and services (capital goods).  Buildings  Tools (tractors, pencils, etc.)  Human Capital- knowledge and skills a worker gains through education and experience.

9. Physical Capital Benefits  Extra time  More knowledge  More productivity

10. Entrepreneur  Ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services.

11. LandEntrepreneurLaborEntrepreneurCapitalEntrepreneur Goods and Services