Fundamentals Part One Resources and Scarcity SSEF1

Suppose you are craving French Toast and eggs all day at school. You decide that when you get home you will make yourself breakfast for dinner. When you get home you look in the refrigerator and see that there are only two eggs meaning you can have eggs or French toast, but not both. You need to make a choice. You are facing the basic problem of economics….

THE FUNDAMENTAL ECONOMIC PROBLEM Scarcity is the condition where unlimited human wants face limited resources. is the condition where unlimited human wants face limited resources. Economics is the study of how people satisfy wants with scarce resources. Economics is the study of how people satisfy wants with scarce resources. Needs are required for survival; wants are desired for satisfaction. Needs are required for survival; wants are desired for satisfaction. Someone has to pay for production costs, so There Is No Such Thing As A Free Lunch (TINSTAAFL). Someone has to pay for production costs, so There Is No Such Thing As A Free Lunch (TINSTAAFL).

Scarcity All resources (besides air and sunlight) are scarce whether or not they seem to be nothing is unlimited Resources are all the things we can use to make goods In order to ensure that we do not run out of resources we must decide how to allocate them.

Goods are items that are economically useful or satisfy an economic want. They are: – tangible: can physically touched. – can be classified as: consumer: used for consumption capital : used for production durable: last longer than 3 years. nondurable: last less than 3 years. Services are work performed for someone and are intangible. Consumers use goods and services to satisfy wants and needs. GOODS & SERVICES

TRADE-OFFS are the alternative choices people face in making an economic decision. – A decision-making grid lists the advantages and disadvantages of each choice. OPPORTUNITY COSTS is the cost of the next best alternative among a person’s choices. – The money, time, or resources a person gives up, or sacrifices, to make his final choice. TRADE-OFFS & OPPORTUNITY COST

Factors of Production (Productive Resources) The things needed to make and sell goods 1.Land is the society’s limited natural resources – landforms, minerals, vegetation, animal life, and climate. 2.Capital is the means by which something is produced such as money, tools, equipment, machinery, and factories. 3.Labor is the workers who apply their efforts, abilities, and skills to production. 4.Entrepreneurs are risk-takers who combine the land, labor, and capital into new products.

FACTORS OF PRODUCTION (PRODUCTIVE RESOURCES)

Capital Two Forms:  Physical: – all the tools, machinery, and other equipment a business needs  Human – Skills and knowledge of workers

Entrepreneurship A person who starts and manages a business. They take risk in opening/trying something new in hope of making a profit. They are vital to new ideas coming into the market.