Scarcity and the Factors of Production 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. 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. 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 Factors of Productions Land Labor Capital Physical Capital Human Capital Entrepreneur 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). 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. 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. Physical Capital Benefits Extra time More knowledge More productivity Entrepreneur Ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services.
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