4Wants Add to the quality of life But not necessary for survival Wants never end – once we fulfill a want, it is usually followed by another want.
5Goods and ServicesWe satisfy our needs and wants with GOODS and SERVICES.GOODS (PRODUCTS) satisfy our MATERIAL needs and wants.SERVICES satisfy our wants that we can’t see or touch:Going to a movieGet a haircutTake a swimming lessonUse your cell phone
6Economic ResourcesCompanies need resources to produce goods and services.Economic resources are also called FACTORS OF PRODUCTION
73 types of resources Natural Resources (renewable and non- renewable) Raw materials – all materials that come from the earthWater, air, iron ore, gold, oil, copper, vegetables, fish
82. Human ResourcesIt takes people or LABOR to turn natural resources into goods and servicesPeople who run farms, factories, manage banks, design, machines, process food, announce the news on CNN, check out or groceries, police the streets, or teach business classes.
93. Capital ResourcesTools and equipment used to produce goods and servicesOffice building, factories, tractors, carpenters, power tools, computers, delivery trucksMoney used to start and run the business is also capital.
10Limited ResourcesShortage of resources - In reality, we can’t have everything we want sometimes because of $$$ or because there is a lack of resources to make the product.
11Scarcity Conflict between unlimited wants and limited resources Referred to as the “Basic Economic Problem”
12Economic ChoicesGovernment, Business and Consumers always face scarcity, therefore they must make important decisions about what they will produce, sell, and purchase
13Making economic decisions Decision Making ProcessDefine the problemIdentify choicesEvaluate the advantages and disadvantages of each choiceChooseAct on your choiceReview your decision
14Opportunity CostWhen making a decision, you must give up something to gain something else.Example – You have to make a choice:Go to a football game with your friendsPick up an extra shift at work so that you can make some money to put towards that new car you want.If you choose to work – not going to the football game with your friends would be the opportunity costWhat you give up to gain something else