ECONOMICSGeneral economic theory = relies on assumption that resources are limitedGeneral Definition: Study of people producing and exchanging to get the goods and services they want. It is a social science that describes and analyzes how society chooses among scarce resources to satisfy its unlimited wants.
FACTORS OF PRODUCTIONResources =Basic elements used to produce goods and services.1. Natural Resources2. Human Resources3. Capital Resources4. Entrepreneurship
1. NATURAL RESOURCES- “Gifts of Nature”- Air, sunlight, forests, earth, water and minerals are all classified as land, as are all manner of natural forces or opportunities not created by humans.- Every tangible good is made of natural resources…implications?
2. HUMAN RESOURCES - “Labor” Taking natural resources and exerting human force to fulfill our wants and needs Converting Natural resources to human satisfactions
3. CAPITAL RESOURCES Buildings, tools, and machines people use to produce other goods and services.
4. ENTREPRENEURSHIP Imaginative thinking, willing to take risks, and the management and organizational skills needed to operate a business
Three Fundamental Questions 1. WHAT TO PRODUCE? Fruits and veggies? Sugar Cane? Manufactured Goods?
Three Fundamental Questions2. How to produce?Machines?Workers?Exploiting Children?Exploiting Workers Abroad?
Three Fundamental Questions3.For whom to produce? Developing world?Malnourished? Developed world?Affluent societies?
NoticeScarcity is not a Shortage! A shortage occurs when a good or service is not being produced or offered in a given situation. It is not a permanent condition! It can be corrected as additional resources or production becomes available. Scarcity is Permanent! Individuals will always want more than they can have.