EconomicsEconomics

Basic EconomicsBasic Economics

What is Economics?What is Economics?

It is the study of how individuals and It is the study of how individuals and nations allocate their scarce resources nations allocate their scarce resources for the fulfillment of seemingly unlimited for the fulfillment of seemingly unlimited wants and needs.wants and needs.

The fundamental problem The fundamental problem of economicsof economics

Scarcity Scarcity This means that there is a limited amount This means that there is a limited amount

of resources to produce the goods and of resources to produce the goods and provide the services that people both provide the services that people both need and want.need and want.

Resources (Factors of Resources (Factors of Production)Production)

Resources are those things that are used Resources are those things that are used to make goods and provide services.to make goods and provide services.

Economic resources include: land, labor, Economic resources include: land, labor, and capital.and capital.

All resources are scarce so all of the All resources are scarce so all of the goods and services produced through goods and services produced through those resources are also scarce.those resources are also scarce.

LandLand

All of the natural resources that are used All of the natural resources that are used to produce goods and services.to produce goods and services.

LaborLabor

Any effort a person devotes to a task for Any effort a person devotes to a task for which that person is paid.which that person is paid.

CapitalCapital

There are three different types of capital. There are three different types of capital. These include: physical, human, and These include: physical, human, and financial.financial.

Physical CapitalPhysical Capital

Tools, equipment, and machinery that is Tools, equipment, and machinery that is used to create other goods and services.used to create other goods and services.

Human CapitalHuman Capital

The skills and knowledge gained by The skills and knowledge gained by individuals through education and individuals through education and experience.experience.

Financial CapitalFinancial Capital

Money used to purchase, rent or build Money used to purchase, rent or build physical capital.physical capital.

The Role of the The Role of the EntrepreneurEntrepreneur

An entrepreneur is an individual who An entrepreneur is an individual who assembles the resources (factors of assembles the resources (factors of production) to create goods and services.production) to create goods and services.

The entrepreneur is a risk-taker because The entrepreneur is a risk-taker because there is no guarantee that what they do there is no guarantee that what they do will be successful.will be successful.

What are Goods?What are Goods?

These are physical objects such as These are physical objects such as clothes or shoes.clothes or shoes.

What are Services?What are Services?

Services are jobs that are performed for Services are jobs that are performed for someone else.someone else.

Examples include getting a haircut and Examples include getting a haircut and going to the dentist.going to the dentist.

What are Wants?What are Wants?

Wants are items that we desire but are Wants are items that we desire but are not essential to survival.not essential to survival.

What are Needs?What are Needs?

Needs are things like water, food, Needs are things like water, food, clothing, and shelter that you have to clothing, and shelter that you have to have in order to survive.have in order to survive.