1. CIE3M1-01 M. Nicholson

2. 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

3. Natural Resources Also called “land” by economists it includes minerals, forests, water and fish i.e. all “free gifts of nature” Canada is 2 nd 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

4. 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

5. 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

6. 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

7. 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

8. Production Any economic activity that satisfies human wants All productive activity divided into three categories: primary (farmers, fishermen), secondary (autoworkers) and tertiary (teacher, salesperson)

9. Copyright © 2005 by McGraw-Hill Ryerson Limited. All rights reserved. Production Possibilities Curve Production Possibilities Schedule Hamburgers Computers point on graph Production Possibilities Curve 0 1 2 3 1000 600 b c 10000a 9001b 6002c 03d03d Computers Hamburgers e f inefficient unattainable d 900 a

10. Copyright © 2005 by McGraw-Hill Ryerson Limited. All rights reserved. The Law of Increasing Costs Production Possibilities Schedule Hamburgers Opportunity Computers point Cost of on graph Computers Production Possibilities Curve 0 1 2 3 1000 600 1000 0 a 100 900 1 b 300 600 2 c 600 0 3 d Computers Hamburgers As the quantity of computers rises, so does their opportunity cost. a b 900 c d

11. Circular Flow Diagram