Gr.10 Business Unit 2: Economics Basic, the Factors of Production, Supply and Demand

What is economics?

study of the way people make decisions about the use of scarce resources to satisfy their needs and wants

Scarcity

a limited amount of resources to meet unlimited wants and needs

EVERYTHING IS SCARCE!

Why do we have scarcity

we have unlimited wants and needs but limited resources, creating scarcity

so we need to make choices

Causes of scarcity

1. Personal Perspective: your own feelings of what is needed or wanted.

2. Poor Distribution of Resources: not using your resources to their potential.

3. Rapid Increase in Demand: A sudden rush to use resources can cause a shortage.

Ways we deal with scarcity

• Doing without something

• Creating more resources

• Making better use of resources

Real Costs

All of the resources used to produce a good or service.

Most resources can be used for only one thing at a time.

Trade Off

When you choose between two possible

uses for a resource, giving up one alternative for

another.

Opportunity Costs

The value of time, money, goods, and services given up in an economic choice.

Production possibilities chart

representation of possible quantities that can be produced of two products

4 factors of production

Capital: human-made resource that is used to create other goods or services

Entrepreneur: use land, labour, and capital in order to produce a good or service for consumers

Land: ALL natural resources / raw materials

Labour: effort that people contribute to the production of goods and services

Demand

desire, willingness, and ability to buy a good or services

demand schedule

table listing various quantities of a product or service with a demand over a range of possible prices

• graph lists prices on the vertical axis and quantities demanded on the horizontal axis

law of demand

quantity demanded in price move in opposite directions

higher price = lower quantity demanded

lower price = higher quantity demanded

supply

various quantities of a good or service that producers are willing to sell at all possible market prices

supply schedule

table showing the quantities producers are willing to supply at various prices

• graph lists prices on the vertical axis and quantities demanded on the horizontal axis

law of supply

as the price of a good or service increases, the quantity of goods or services increases, and vice versa

surplus

amount by which the quantity supplied is higher than quantity demanded

shortage

amount by which the quantity demanded is higher than the quantity supplied

low supply & high demand =

high supply & low demand =

higher price

lower price