Study of the choices people make
when faced with scarcity
scarcity
Unlimited wants with limited resources
What is scarce ?
ANYTHING
YOU DO NOT
HAVE!!!
AGREE OR DISAGREE?
Resources are “scarce”.
There are not enough.
RESOURCES
SCARCE
Needs vs. Wants
survival
Water
Food
Shelter
Clothing
like or desire
Coke
Pizza Hut
mansion
Abercrombie
Need or Want?
•
•
•
•
•
•
•
•
Chocolate milk
Milk for a newborn baby
Hairspray
Toothpaste
Shelter during winter
Car
Ipod
water
3 Basic Economic Questions
1. What to produce?
2. How to produce?
3. For Whom to produce?
Factors of Production
• What went into making this?
What went into this?
Rubber (from
Malaysia)
machines
metal
Someone who
put all of this
together.
wood
graphite
4 Categories of Productive Resources
(Factors of Production)
LAND
LABOR
- Natural, renewable resources
- Human resources, people
-wood, rubber, graphite, land,
animals
-MENTAL and PHYSICAL
CAPITAL
- A produced good used in the
prduction of another good
-Machines, computers, buildings, etc
ENTREPRENUERSHIP
-The person or group responsible
for putting the other 3 together to
produce something
Factors of Production
1. Land: includes not only
property on which a
production plant is built, but
all other natural resources.
(land, forests, water
resources, oil)
2. Labor: is the contribution of
human workers to the
production process. (school
teachers, janitors)
Factors of Production
3. Capital: refers to all the
structures and equipment
involved in the
manufacturing process.
(machinery storage,
transportation)
4. Entrepreneurship: is a
specific form of labor. A
risk-taker in search of
profits who does something
new with existing
resources.
Natural Resources:
Human Resources
List examples
List examples
Draw picture to represent Draw picture to represent
Think of a product
Capital Resources
Entrepreneurship
List examples
List examples
Draw picture to represent Draw picture to represent
How are scarce resources
allocated?
• Our economic system allocates resources
by price.