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Scarcity and the
Factors of Production
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Scarcity and Choice
Need- something like food, air, shelter, water (necessary for survival)
Want- item we desire—not essential to survival
CANT HAVE EVERYTHING YOU NEED OR WANT—YOU HAVE TO MAKE CHOICES!!
Economics- study of how people seed to satisfy their needs and wants by making choices.
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Scarcity
Goods- physical objects such as shoes and shirts, cars, or chairs.
Services- actions or activities that one person performs for another… such as haircuts, dental checkups, and tutoring.
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Scarcity vs. ShortageScarcity- implies limited
quantities of resources to meet unlimited wants.
ALL GOODS AND SERVICES PRODUCED ARE SCARCE.
Shortage- occurs when producers will not or cannot offer goods or services at current prices. Can be long-term or short-term. Holiday seasons Wars and droughts
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Factors of Productions
Land
Labor
Capital Physical Capital Human Capital
Entrepreneur
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Land
All natural resources used to produce goods and services
Natural resources are found in nature.
Can include farmland, products on the land (coal, water, forests).
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Labor
The effort that a person devotes to a task for which that person is paid.
Can include medical aid provided by a doctor, a painting created by an artist, or the repair of a TV.
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Capital Any human-made resource that
is used to produce other goods and services.
Physical Capital- Human-made objects used to create other goods and services (capital goods). Buildings Tools (tractors, pencils, etc.)
Human Capital- knowledge and skills a worker gains through education and experience.
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Physical Capital Benefits
Extra time
More knowledge
More productivity
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Entrepreneur
Ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services.
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