Scarcity, Shortage And The Factors Of Production Flashcards
When is a resource considered scarce?
When it has more than one valuable use
Shortage
Temporary or Long-term shortage of a product caused by an external force
Factors of Production
All resources used to make all goods and services (Capital, Labor, Land)
Land Resources
All natural resources found in nature itself, without human involvement that are used to produce things
Labor Resources
Effort a person devotes to a task for which they are paid
Capital Resources
Any human-made resource that is used to produce other goods and services
Physical Capital
Human-made material resources used in production
Human Capital
Knowledge and skills a person gains through education and experience
Can you tell something is scarce?
- there simply aren’t enough goods or resources in the world to satisfy all our needs and wants
- as zero price, there is not enough for everyone to have all they want
- Scarcity always exists
- They can’t make more
How can you tell something is a shortage?
- Shortage is price-determined
- at the current price, people want to buy more than suppliers want to sell
- shortage is a man-made choice. Suppliers are “not willing” to make goods available for this amount of money
- Shortages often go away over time. There is just not much of the good or the resource right now
- It’s a shortage if “they can make more”
Economics
Is the study of how people seek to satisfy their needs and wants by making choices
How are scarce resources used in an economy?
Goods and Services
Goods
Resources used to create physical products
Services
Resources used to provide services (activities)
Scarcity
There are limited quantities of resources meet unlimited wants
