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Published byMoris Edwards Modified over 9 years ago
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Economics Basic Economics
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What is Economics? It is the study of how individuals and nations allocate their scarce resources for the fulfillment of seemingly unlimited wants and needs.
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The fundamental problem of economics Scarcity This means that there is a limited amount of resources to produce the goods and provide the services that people both need and want.
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Resources (Factors of Production) Resources are those things that are used to make goods and provide services. Economic resources include: land, labor, and capital. All resources are scarce so all of the goods and services produced through those resources are also scarce.
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Land All of the natural resources that are used to produce goods and services.
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Labor Any effort a person devotes to a task for which that person is paid.
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Capital There are three different types of capital. These include: physical, human, and financial.
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Physical Capital Tools, equipment, and machinery that is used to create other goods and services.
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Human Capital The skills and knowledge gained by individuals through education and experience.
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Financial Capital Money used to purchase, rent or build physical capital.
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The Role of the Entrepreneur An entrepreneur is an individual who assembles the resources (factors of production) to create goods and services. The entrepreneur is a risk-taker because there is no guarantee that what they do will be successful.
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What are Goods? These are physical objects such as clothes or shoes.
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What are Services? Services are jobs that are performed for someone else. Examples include getting a haircut and going to the dentist.
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What are Wants? Wants are items that we desire but are not essential to survival.
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What are Needs? Needs are things like water, food, clothing, and shelter that you have to have in order to survive.
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