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Chapter 2
Economic
Resources and
Systems
Section 2.1
Economic
Resources
Read to Learn
Explain how scarcity requires individuals and
nations to make decisions about resources.
Describe the four factors of production.
The Main Idea
Both people and countries must deal with the
problem of scarcity. Nations do not have enough
factors of production to produce everything that
their population wants. Factors of production are all
the economic resources necessary to produce a
society’s goods and services.
Key Concepts
Making Economic Decisions
Factors of Production
Key Terms
scarcity
the lack of resources
factors of
production
all the economic resources
necessary to produce a society’s
good and services
Key Terms
natural
resources
raw materials from nature that are
used to produce goods
labor
resources
people who make the goods and
services for which they are paid
Key Terms
capital
resources
things used to produce good
and services
resources used by the people
entrepreneurial
who recognize a business
resources
opportunity and start a business
Key Terms
entrepreneurship
The process of recognizing a
business opportunity, testing
it in the market, and
gathering the resources
necessary to start and run a
business
Key Terms
entrepreneur
An individual who undertakes the
creation, organization, and
ownership of a business
Making Economic Decisions
The principle of
scarcity states that
there are limited
resources for
satisfying unlimited
wants and needs.
scarcity
a lack of resources
Graphic Organizer
Demand
Supply
When dealing with
scarcity, it is important
to think of the best way
to use the item that is
in short supply.
Factors of Production
There are four factors
of production.
factors of production
all the economic resources
necessary to produce a
society’s goods and
services
Graphic Organizer
Natural
Resources
Labor
Resources
Capital
Resources
Entrepreneurial
Resources
Natural Resources
Natural resources
can be processed in
various ways to create
goods.
natural resources
raw materials from nature
that are used to produce
goods
Graphic Organizer
Renewable resources
can be reproduced
Nonrenewable
resources are limited
• Wheat
• Cattle
• Coal
• Iron
• Oil
Being Resourceful
During the world oil crisis in 1973, Japan was
able to reduce its dependence on oil and
enhance productivity through conservation and
alternate sources of industrial energy.
Labor Resources
Labor resources can
be skilled or unskilled,
physical or intellectual.
labor resources
people who make the
goods and services for
which they are paid
Capital Resources
Capital resources
are also called capital
goods.
capital resources
the things used to produce
goods and services, such
as buildings, materials,
and equipment
Capital Resources
Examples of capital resources include:
Delivery trucks
Supermarkets
Cash registers
Farm equipment
Entrepreneurial Resources
Entrepreneurial
resources meet
society’s changing
wants and needs.
entrepreneurial
resources
resources used by the
people who recognize
opportunities and start
businesses
Entrepreneurial Resources
Entrepreneurship is
necessary when
starting a business.
entrepreneurship
the process of recognizing
a business opportunity,
testing it in the market,
and gathering the
resources necessary to
start and run a business
Entrepreneurial Resources
An entrepreneur
accepts the risks and
responsibilities of
business ownership.
entrepreneur
an individual who
undertakes the creation,
organization, and
ownership of a business
Entrepreneurial Resources
Entrepreneurial resources are individuals who
start and direct businesses to produce goods
and services to satisfy needs or wants.
Labor resources are people who produce the
goods or services.
1. Why do all nations face the problem of
scarcity?
No nation has enough resources to satisfy all of
its wants and needs.
2. Identify one similarity and one difference
between labor and entrepreneurial resources.
Entrepreneurial resources initiate businesses
to make new goods and services; labor
resources produce goods and services.
3. List five different natural resources.
Answers will vary. Examples include water, oil,
iron ore.
End of
Chapter 2
Economic
Resources and
Systems
Section 2.1
Economic
Resources