Understanding Scarcity: Goods, Services, and Factors of Production
Learn about goods, services, and factors of production, including examples, differences, and importance in the economy. Discover the role of entrepreneurs, opportunity costs, and incentives in decision-making. Understand PPC curves and resource allocation.
Understanding Scarcity: Goods, Services, and Factors of Production
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Presentation Transcript
Good • Physical objects • Objects that are tangible • Service • Actions or activities that one person performs for another
Land • Labor • Capital • Physical Capital • Human Capital
Land • Natural resources that are used to make goods and services
Labor • The effort that people devote to a task for which they are paid
Capital • Any human-made resource that is used to create other goods and services
Understand the difference between physical and human capital.
Physical Capital • Machines, tools, and buildings that are used to produce other goods and services • Human Capital • Skills and knowledge gained by a worker through education and experience
“Human capital is as much a part of the wealth of nations as factories, machinery, and other physical capital.” Economist - Gary Becker
Support your opinion on which is more important to a nation’s economy, physical or human capital.
Explain how a business would use the 3 Factors of Production to make a product.
Identify and explain the importance of at least 3 personal characteristics common to successful entrepreneurs.
“We have UNLIMITED WANTS, but LIMITED RESOURCES.” • This causes the scarcity of everything.
Explain situations in your life that involved opportunity costs and be able to identify and explain why they are your opportunity costs.
Opportunity Cost • The most desirable alternative given up when a making a decision.
Whenever people decide whether thebenefitsof a particular action are likely to outweigh itscosts, they engage in a form of benefit-cost analysis.... • Benefit > Cost • Do It!!! • Benefit < Cost • Don’t Do It!!!
A reason for doing something • 3 types from Freakonomics • Moral • one acts out of conscience or conviction • Social • actions are related to shame • Economic • people act in their financial interest.
Provide examples of how incentives affect people’s decisions.
Consumer Goods Capital Goods
Illustrate where a society is operating efficiently in regards to the PPC curve.
A B C Consumer Goods D Capital Goods
Illustrate where a society is underutilizing its resources in regards to the PPC curve.
Consumer Goods X Capital Goods
Illustrate where a society is operating at an unsustainable level in the short run in regards to the PPC curve.
U Consumer Goods Capital Goods
Change in Quantity of Resources Available • Increase in Quantity; Curve shifts to the Right • Change in Quality of Resources Available • Increase in Quality; Curve shifts to the Right • Change in Technology • Increase in Technology; Curve shifts to the Right
U A B C Consumer Goods X D Capital Goods
