1. SCARCITY

2. SCARCITY- The condition that results from society not having enough resources to produce all the things people would like to have.
What comes to mind when you think of something that is scarce?

3. ECONOMICS- the study of how people try to satisfy unlimited wants through the careful use of relatively scarce resources.
What does “scarcity” cause people to have to do?

4. Because of scarcity, we have to make wise economic choices
Because of scarcity, we have to make wise economic choices. There are 3 basic questions that every economy has to answer:
1. WHAT to produce- what things do we want to produce with the limited resources that we have? We can’t produce everything so we must decide.

5. 2. HOW to produce- what methods will we use to produce the goods we’ve decided on.
a. What kinds of questions would you have to answer when thinking about how to produce something?

6. 3. FOR WHOM to produce- who are we making our product for
3. FOR WHOM to produce- who are we making our product for? How will it be allocated?
a. What are some ways that countries decide how goods and services will be allocated?

7. FACTORS OF PRODUCTION
Factors of production- resources required to produce the things we would like to have. There are 4 factors:
1. Land
2. Capital
3. Labor
4. Entrepreneurship

8. LAND- refers to the “gifts of nature” or natural resources not created by humans (i.e. forests, rivers, mineral deposits, fertile fields, etc..). This factor is thought of as being fixed or in limited supply.
CAPITAL- the tools, equipment, machinery, and factories used in the production of goods and services. Financial capital is the money used to buy these things.

9. LABOR- people with all their efforts, abilities, and skills.
ENTREPRENEURS- people who are willing to take risks in search of profit by doing something new with resources. They are the driving force of an economy because they start new businesses or bring new or improved products to market.
When all the factors of production are present, production can take place.