Scarcity exists because there are never enough resources to satisfy all human wants. There is a difference between needs, which are essential for survival, and wants, which are desires but not necessary. Economics studies how people make choices to satisfy needs and wants given the constraint of scarcity. There are four factors of production that are used to make goods and services: land, labor, capital, and human capital.

1. SSccaarrcciittyy aanndd
tthhee FFaaccttoorrss ooff PPrroodduuccttiioonn
Chapter 1, Section 1

2. Need – Something that is necessary for
survival.
Want – An item that we desire but that is
not essential to survival.
NNeeeeddss vvss.. WWaannttss

3. NNeeeeddss
Food
Shelter
Clothing
Education

4. Scarcity – Always exists. There’s never
enough time, money, resources, etc.
Shortage – Temporary. Natural disasters,
long term drop in resources, etc.
Economics – study of how people seek to
satisfy their needs and wants by making
choices.
SSccaarrcciittyy

5. Factors of Production – resources used to
make goods and services
1.Land - Natural Resources
2.Labor - Effort devoted to a task
3.Capital - Physical (buildings & tools)
Human (knowledge)
FFaaccttoorrss ooff PPrroodduuccttiioonn

7. LLaanndd

8. LLaabboorr

9. CCaappiittaall

10. CCaappiittaall

11. LLaanndd