Economic
Factor of production

Land: All natural resources provided by nature such as fields,
forests, oil, gas, metals and other mineral resources. The payment
for land use and the received income of a landowner is rent.

Labour: Human effort used in production which also includes
technical and marketing expertise. The payment for someone
else's labour and all income received from one own labour
is wages. Labour can also be classified as the physical and mental
contribution of an employee to the production of the good(s).


Capital: Human-made goods (or means of production) which are
used in the production of other goods. These include machinery,
tools and buildings.
Enterprise: The skill and risk-taking ability of the person who
brings together all the other factors of production together to
produce goods and services. Usually, the owner or founder of a
business.
Choices
1. What to produce?
2. How to produce?
3. For who to produce for?
Scarcity
When the demand for a resource is greater than the supply of that
resource, as resources are limited. Scarcity results in consumers
having to make decisions on how best to allocate resources in order to
satisfy all basic needs and as many wants as possible.
Trade-off
This means that choosing more of this one thing can only be achieved
by giving up something else in exchange.
Opportunity cost
 The profit is lost when one alternative is selected over another.
 The cost of the next best alternative is forgone when choices are
made
The law of opportunity cost
When all resources are being used, an increase in the production of one
goods will lead to greater forgone production of another good.