1. Scarcity and the Factors of Production
Chapter 1: Section 1

2. Scarcity and Choice Need- Air, Food, Shelter.
Want-An item we desire but not necessary for survival.
Economics is the study of how people seek to satisfy their needs and wants by making choices.
Scarcity and Choice

3. Scarcity Goods are physical objects such as shoes and shirts.
Services are actions or activities that people perform for one another.
Scarcity implies limited quantities of resources to meet unlimited wants.
Scarcity

4. A shortage occurs when producers will not or cannot offer goods or services at the current prices.
Holiday season
Wars
Scarcity always exists. Why?
Scarcity vs Shortage

5. Factors of Production Land Labor Capital Entrepreneurs
Physical Capital
Human Capital
Entrepreneurs
Factors of Production

6. The factors of production are all the resources used to make goods and services.

7. Land All natural resources used to produce goods and services.
Fertile land, coal, oil, water, forests
Land

8. The effort that a person devotes to a task for which that person is paid.
Medical aid, Assembly line, paintings, repairs
Labor

9. Capital is any human-made resource that is used to produce other goods and services.
Physical Capital v. Human Capital
Capital

10. Human made objects used to create other goods and services.
Buildings and tools
Physical capital is needed for Extra time, more knowledge, more productivity.
Physical Capital

11. The knowledge and skills a worker gains through education and experience.
Doctors and stethoscopes
Teachers and computers
Human Capital

12. Ambitious leaders who decide how to combine land, labor and capital resources to create new goods and services.
Individual who take risks to start a business and create new industries.
Entrepreneur

13. THE ECONOMIC WAY OF THINKING
Micro and Macro Views of the World
Microeconomics: The study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments.
Macroeconomics: The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make.
THE ECONOMIC WAY OF THINKING