MA3.01 Notes
OBJECTIVE: 3.01 Recognize terminology related to economics
A. Recall economic terms.
1. Economics: The study of how to meet unlimited wants and needs of a society with its
limited resources.
2. Scarcity: A condition in which more goods and services are desired than are available.
Scarcity forces people, businesses, and nations to make choices. Unlimited wants with
limited resources results in scarcity, also referred to as a shortage. For example,
Hurricane Michael hit the coast of North Carolina. Twenty percent of the homes in the
Wilmington area were left with no electricity forcing people to go to stores to purchase
batteries. This resulted in stores running out of batteries.
3. Surplus: A condition where consumers desire less goods and services than were
produced, also referred to as an overage. For example, after the Fourth of July, WalMart put all of their left over holiday merchandise on sale for 90% off.
B. Recall types of economic resources (factors of production).
1. Economic resources: Includes land, labor, and capital resources which can be used to
produce the goods and services that people consume. This is also known as the factors
of production.
2. Land: Natural resources including everything contained in the earth and found in the
sea. For example, oil, minerals, gas, and coal.
3. Labor: Human resources including all workers in the economy. For example, full- and
part-time workers, managers, public employees, and professional people.
4. Capital: The money needed to start and operate a business or the products used in the
production of other goods. For example, purchasing lawn equipment to start a lawn
care business or securing a warehouse for storing the equipment.
5. Entrepreneurship: Incorporates the skills of people who are willing to take the risk of
starting their own business. Entrepreneurs organize economic resources in order to
create goods and/or services needed and desired in an economy. For example, Christy
uses her horticulture background to begin her summer lawn care business.
C. Recognize types of economic utility.
1. Utility: Refers to the added value or usefulness of a product.
2. Form utility: The value added by changing raw materials or putting parts together to
make them more useful. For example, combining the ingredients necessary to make a
pizza.
3. Place utility: The value added by having a product where customers can buy it. For
example, selling pizzas in the school cafeteria.
4. Time utility: The value added by having a product at a certain time of year or a
convenient time of day. For example, offering pizzas for sale during the school lunch
hours.
5. Possession utility: The value added by exchanging a product for monetary value. For
example, the cafeteria will accept cash or a student debit card in exchange for the pizza.
6. Information utility: The value added by communicating with the customer. For
example, sending out fliers for a new pizza restaurant to all homeowners who live in a
five-mile radius of the restaurant.