NEEDS AND WANTS
NEED - is a good or service essential for living
WANT - is a good/service people would like to have, but which is not essential for living.
people's wants are unlimited (of course)
ECONOMIC PROBLEM - theres unlimited wants, but limited resources to produce goods & services to satisfy those wants.
FACTORS OF PRODUCTION - resources needed to prouduce goods/services. 4 factors of production & they are limited supply.
SCARCITY - is the lack of sufficient products to fulfil the total wants of the population.
4 factors of production
the problem of shortage of goods and services is
It's from having few factors of production aka resources of production.
LAND - used to cover all natural resources.
from nature. includes: fields, forests, oil, gas, metals & other mineral resources
LABOUR - the efforts of people needed to make products
CAPITAL - this is the finance, machinery & equipment needed for manufacture of goods
ENTERPRISE - the skill & risk-taking ability of person who brings other resources together to produce a good/service.
E.g: owner of business. aka entrepreneurs
we've seen that the factors of production are LIMITED.
this causes people to have to make a choice of what they really need.
we consider the other alternative when we choose
OPPORTUNITY COST is the next best alternative given up by choosing another item.
e.g choosing a holiday to hawaii rather than a shiny new car. (nice)
buying a new computer OR pay for a new advertising campaign?