What is economics?

Economics is making decisions about how to distribute limited resources to satisfy

unlimited wants

Natural Resource (land)

Capital Resource (tools)

+

Human Resource (labor)

Goods &(objects)

Services(activities)

Every society has limited productive resources

Which are used to produce

Entrepreneurship (risk)

Natural Resource (land), Capital Resource (tool), Human Resource (labor),

or Entrepreneurship (risk) ?

• Raw materials; made by nature• Used to make other goods• Ex. trees, oil, water, minerals

• Goods used to make other goods• Ex. tools, machines, factories• More & better capital goods help workers to

make products more quickly and more cheaply

NATURAL RESOURCES (land)

CAPITAL RESOURCES (tools)

• A worker’s health, education, experience, training, skills, and values

• Ex. social studies class, a computer training course, medical care, & parent lectures about being on time and honesty

• Raise salary, improve health, or add to a person’s good habits

HUMAN RESOURCE/CAPITAL (labor)

• The rare mixture of the qualities needed to create and run businesses.

• People who have these qualities risk their time, money, and energy to make a profit.

• An entrepreneur recognizes human wants and takes risks to provide a good or service to satisfy those wants.

• They might create new products, come up with new ways to make things, or find new ways to reach buyers

• ex. Bill Gates (Microsoft), Ben & Jerry (ice cream), Donald Trump (real estate, tv)

ENTREPRENEURSHIP (risk)

Decide whether the following pictures are an example of a

natural, capital, human resource, or entrepreneurship.

Resources are used to produce

GOODS &

SERVICES

GOODS• have shape and can be seen & touched • can be stored for later use • Ex. cars, clothing, & machines

SERVICES • cannot be touched• must be used as soon as they are

provided• Ex. hair styling, medical care, and

equipment repair do not have a physical presence

Decide whether the following pictures are a good or a service

• CLAP your hands for goods• STOMP your feet for services

good = clap service =

stomp

good = clap service = stomp

good = clap service =

stomp

good = clap service =

stomp

good = clap service =

stomp

good = clap service = stomp

good = clap service = stomp

good = clap service =

stomp

What’s it made of challenge?

Natural Resource (land), Capital Resource (tool),

Human Resource (labor), Entrepreneurship (risk)

What’s it made of?• Pick 1 of your favorite goods or services• Decide what resources were used to

make your good or service– natural resources – capital resources– human resources– entrepreneurship

• Try to name as many resources as you can

Got Milk?Natural Capital Human Entrepreneur

1. Pasture land

2. Grass/ grain

3. Air 4. Water5. Cows6. Oil/gas7. trees

1. Buckets2. Barn3. Fence4. Stool5. Truck6. Factory

building7. Plastic/

cardboard

1. Farmer2. Truck

driver3. Grocer

1. Farm owner

2. Trucking company owner

3. Grocery store owner

Natural Resource

+ Capital Resource

+ Human Resource

= Goods & Services

INPUTS

OUTPUTS

Because all of these resources are limited, SCARCITY occurs…• Scarcity…

– The condition that exists because human wants exceed capacity of available resources to satisfy those wants

Put this in English for me!!!!!!!

For a resource to be SCARCE, it must be…

1.Limited in quantity2.Be desirable3.More than one valuable

use

However, because of scarcity choices must be made to answer

the questions . . .

1. What goods and services will be produced?

2. How will goods and services be produced?

3. Who will consume the goods and services?

Economic SystemCommand

(controlled)

Market(free)

This creates the need for an…

What is the basic economic problem?

Every society must decide how to make the best use of its limited productive resources.

Scarcity, with the resulting need to choose among competing options, is the basic economic problem.