CIE3M1-01
M. Nicholson
Resources & Production
 The more numerous and better quality the productive
resources (human, capital, natural) the more
effectively a country can deal with the problem of
scarcity
 Human, Capital, Natural Resources = Scarcity
Natural Resources
 Also called “land” by economists it includes minerals,
forests, water and fish i.e. all “free gifts of nature”
 Canada is 2nd largest country in the world, but only 7%
of land is used for agriculture
 Key crops are wheat, barley, corn and tobacco
 Beef, pork and poultry products are also important
Natural Resources
 More than 33% of Canada forested  world leader in
newsprint, lumber
 Fishing industry hard hit by depleted stocks
 Canadian Shield full of minerals such as nickel
 Huge reserves of coal, oil and natural gas
 Largest supply of fresh water in the world
Human Resources
 Also called “labour” by economists this is the most
important resource in contributing to the wealth of a
country because it can overcome the scarcity of the
other resources most effectively
 Health
 Education
 Work Attitudes
 Population Size
Capital Resources
 Goods used to produce other goods (e.g. factories,
machines, tools)
 Canada is a capital intensive economy because of the small
population and high wage rates
 Producing capital goods requires sacrifice on the part of a
society because of the opportunity cost of consumer goods
Capital Resources
 Producing capital goods requires skill and enough surplus
resources to be able to make the sacrifice of consumer
goods
 Short term pain leads to long term gain as capital goods
increase productivity and the standard of living with more
goods and services produced for all to enjoy
Production
 Any economic activity that satisfies human wants
 All productive activity divided into three categories:
primary (farmers, fishermen), secondary
(autoworkers) and tertiary (teacher, salesperson)
Production Possibilities Curve
Production Possibilities
Schedule
Production Possibilities Curve
a
1000
b
f
Hamburgers Computers
point
on graph
1000
0
a
900
1
b
600
2
c
Hamburgers
900
unattainable
c
600
e
inefficient
d
0
3
d
0
1
2
Computers
Copyright © 2005 by McGraw-Hill Ryerson Limited. All rights reserved.
3
The Law of Increasing Costs
Hamburgers
Opportunity Computers point
Cost of
on graph
Computers
1000
0
a
100
900
1
b
2
c
Production Possibilities Curve
a
1000
As the quantity
of computers
rises, so does their
opportunity cost.
b
900
Hamburgers
Production Possibilities Schedule
600
c
300
600
600
0
d
3
d
0
1
2
Computers
Copyright © 2005 by McGraw-Hill Ryerson Limited. All rights reserved.
3
Circular Flow Diagram