Scarcity and Factors of Production

Vocabulary flashcards covering the economic concepts of scarcity, rival and non-rival goods, and the four factors of production.

Scarcity

A situation where a limited resource exists in the face of potentially unlimited wants.

Scarce resource

A resource for which one must give something up to obtain it, such as caviar or labor.

Free resource

A resource that is not limited and does not require giving something up, such as oxygen.

Rival good

A good where consumption by one person limits the ability for others to use it simultaneously, such as cake, housing, land, oxygen in an airtight room, or roads during rush hour.

Non-rival good

A good where one person's use does not limit the ability for others to use it, such as air to breathe outside or roads at $3\text{ am}$.

Four Factors of Production

The categories of land, labor, capital, and entrepreneurship required to produce goods and services.

Land

A factor of production that includes natural resources such as water, air, and energy, as well as the physical space needed to build a factory or farm.

Labor

A factor of production involving the work individuals perform, such as planting seeds on a farm or working in a factory.

Capital

A factor of production consisting of items produced to produce other things, including tools, buildings, and machinery.

Entrepreneurship

A factor of production involving the organization of other factors to produce things, the use of technology, and the goal of producing as much as possible.

Capital goods

Goods that are produced specifically to be used to produce other things.