Needs are items that people must have in order to survive, such as food, water and clothing. Wants are a wish or desire for something that will make life more enjoyable for a person, and are not necessary for survival. In order to make good choices with their available resources, people must know the difference between needs and wants.
FIGURE1 The basic economic problem is scarcity, where we have unlimited needs and wants, but limited resources to satisfy them all — this creates an imbalance.
Land, labour, capital, enterprise
Food, clothing, shelter, water, medicine, jewellery, car, travel, love, entertainment, recognition, computer, electricity, wisdom
Limited resources
Unlimited needs and wants
However, the difference between a need and a want is sometimes not clear. Generally, most of us would say that needs include shelter, health care and access to good hygiene facilities. You might say that a car, computer, internet and mobile phone are wants. However, many people would suggest that these are needs. To satisfy our needs and wants, businesses use resources to produce goods and services. There are four main types of economic resources: land, labour, capital and enterprise. These types of resources can be seen in FIGURE2 .
FIGURE2 There are four main types of economic resources: land, labour, capital and enterprise.
Types of resources
Enterprise
Land
Labour
Capital
• Individuals who organise and combine the other three resources to create value • Entrepreneurs take on risk by starting businesses in the hope of making a proýt
• Resources found in nature • Examples include rainfall and climatic conditions, mineral deposits and forests
• Includes all the people who are employed by businesses and government • Examples include doctors, builders and businesspeople
• These resources have been created by combining land and labour • Examples include the
electricity grid system, commercial buildings, highways, schools, factories and machinery
TOPIC20 Economics and Business concepts and skills 587
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