Economy

what is economy?

• The way a nation makes choices.
• These choices involve how the nation will use its resources to produce and distribute goods and services.

resources

• All things used in producing goods and services
• Factors of Production - the technical term economists use for resources

4 factors of production

• land
• labor
• capital
• entrepreneurship

land

• Everything on the earth in its natural state / the earth's natural resources
• Resources Include: Everything contained in the earth or found in the sea Coal and crude oil are examples A lake and all the living things in the lake are also examples

labor

• All the people who work in the economy
• Labor includes: Full and Part-time Workers Both the Public and the Private sector You sent

capital

• The money needed to start and operate a business
• The goods used in the production process

CAPITAL

• Examples are: Factories, Office Buildings, Computers, Raw materials that are processed, into a more useful form (lumber, steel)

entrepreneurship

• he skills of the people willing to risk their time and money to run a business
• Entrepreneurs organize the other factors of production to create the goods and services desired in an economy

infrastructure

• he physical development of a country
• Things necessary for production and distribution of goods and services

INFRASTRUCTURE

• Parts of the infrastructure include: Roads, Ports, Sanitation Facilities, Utilities

scarcity

• The difference between wants and needs and the resources available to meet these needs is called Scarcity.
• Nations have unlimited wants and needs but limited resources – Scarcity forces the nations to make economic choices.

the basic economic questions

• Nations must answer 3 basic economic questions when deciding to use their limited resources
• The way nations answer these questions defines their economic system

THE BASIC ECONOMIC QUESTIONS

• What goods and services should be produced?
• How should the goods and services be produced?
• For whom should the goods and services be produced?

what should be produced?

• Consumers decide what is to be produced through purchases made in the market place.
• Items that satisfy the customer's needs and wants are purchased making the products successful
• Items that do not satisfy the needs and wants of the consumer are not purchased and are not successful

how should goods are services be produced?

• How products will be produced is left up to the business
• Businesses must be competitive
• Businesses must produce quality products at lower prices than their competitors
• Businesses must find the best way to produce goods and services
• Businesses must also find the best way to encourage customers to purchase their products

for whom should goods & services be produce?

• Those individuals with the most money are able to purchase more goods and services. • To obtain money individuals work and invest.

thank you