FIGURE1 The four main types of economic resources are land, labour, capital and enterprise.
Types of resources
Land
Labour
Capital
Enterprise
• Resources found in nature • Examples include rainfall and climatic conditions, such as wind, mineral deposits and forests
• Includes all the people who are employed by businesses and government • Examples include doctors, builders and businesspeople
• Resources created by combining land and labour • Examples include the electricity grid system, commercial buildings, highways, schools, factories and machinery
• 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 profit
Economic scarcity means that we need to make choices. We cannot produce an unlimited or inýnite number of goods and services because we do not have an inýnite amount of resources. We cannot buy an unlimited number of goods and services because we do not have unlimited amounts of money either. We need to make choices about how scarce resources are used. Making choices about alternatives is an important part of economics, as is explaining how economic resources might be used more sustainably. Opportunity cost Every choice we make has an opportunity cost , which is the next best thing we give up. For example, if a student spends money on sushi, they can’t spend it on a sandwich. The opportunity cost is the sandwich they didn’t buy. Consumers, businesses and governments all face opportunity costs. Consumers decide how to spend their money and time. Businesses choose what products to make and who to sell them to. Governments decide how to manage the economy. Understanding opportunity cost helps us make better decisions.
SkillBuilder discussion Communicating 1. Mind-map with a partner some of the opportunity costs that you, or someone you know, may have faced within the week? 2. Discuss how these decisions can be complicated
FIGURE2 The cost of purchasing a video game includes the opportunity cost of the alternative decision given up. For example, the money could have been spent on a new T-shirt.
TOPIC15 Economics and Business concepts and skills 535
Made with FlippingBook interactive PDF creator