Dealing with Scarcity: Factors of Production and Economic Decision Making

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3. Read to Learn • Explain how scarcity requires individuals and nations to make decisions about resources. • Describe the four factors of production.

4. The Main Idea Both people and countries must deal with the problem of scarcity. Nations do not have enough factors of production to produce everything that their population wants. Factors of production are all the economic resources necessary to produce a society’s goods and services.

5. Key Concepts • Making Economic Decisions • Factors of Production

6. Key Terms scarcity the lack of resources all the economic resources necessary to produce a society’s good and services factors ofproduction

7. Key Terms naturalresources raw materials from nature that are used to produce goods people who make the goods and services for which they are paid laborresources

8. Key Terms capitalresources things used to produce good and services resources used by the people who recognize a business opportunity and start a business entrepreneurialresources

9. Key Terms The process of recognizing a business opportunity, testing it in the market, and gathering the resources necessary to start and run a business entrepreneurship

10. Key Terms An individual who undertakes the creation, organization, and ownership of a business entrepreneur

11. Making Economic Decisions The principle of scarcity states that there are limited resources for satisfying unlimited wants and needs. scarcity a lack of resources

12. Graphic Organizer When dealing with scarcity, it is important to think of the best way to use the item that is in short supply. Demand Supply

13. Factors of Production There are four factors of production. factors of production all the economic resources necessary to produce a society’s goods and services

14. Graphic Organizer NaturalResources LaborResources CapitalResources EntrepreneurialResources

15. Natural Resources Natural resources can be processed in various ways to create goods. natural resources raw materials from nature that are used to produce goods

16. Graphic Organizer Renewable resources can be reproduced Nonrenewable resources are limited • Wheat • Cattle • Coal • Iron • Oil

17. Being Resourceful During the world oil crisis in 1973, Japan was able to reduce its dependence on oil and enhance productivity through conservation and alternate sources of industrial energy.

18. Labor Resources Labor resources can be skilled or unskilled, physical or intellectual. labor resources people who make the goods and services for which they are paid

19. Capital Resources Capital resourcesare also called capital goods. capital resources the things used to produce goods and services, such as buildings, materials, and equipment

20. Capital Resources Examples of capital resources include: • Delivery trucks • Supermarkets • Cash registers • Farm equipment

21. Entrepreneurial Resources Entrepreneurial resources meet society’s changing wants and needs. entrepreneurial resources resources used by the people who recognize opportunities and start businesses

22. Entrepreneurial Resources Entrepreneurship is necessary when starting a business. entrepreneurship the process of recognizing a business opportunity, testing it in the market, and gathering the resources necessary to start and run a business

23. Entrepreneurial Resources An entrepreneur accepts the risks and responsibilities of business ownership. entrepreneur an individual who undertakes the creation, organization, and ownership of a business

24. Entrepreneurial Resources Entrepreneurial resources are individuals who start and direct businesses to produce goods and services to satisfy needs or wants. Labor resources are people who produce the goods or services.

25. Why do all nations face the problem of scarcity? No nation has enough resources to satisfy all of its wants and needs.

26. Identify one similarity and one difference between labor and entrepreneurial resources. Entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

27. List five different natural resources. Answers will vary. Examples include water, oil, iron ore.

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