ECONOMICS; ANOTHER PERSPECTIVE

Economics is the study of the choices made by people who are faced with scarcity.
Scarcity is a situation in which resources are limited but can be used in different ways; so one
good or service must be sacrificed for another.
SOCIETY’S CHOICES
The decisions of producers, consumers and government determine how an economic system answers three fundamental questions:
1. What products do we produce?
2. How do we produce these products?
3. Who consumes the products?
FACTORS OF PRODUCTION
Factors of production are the resources that are used to produce goods and services:
1. Natural resources:
The things created by acts of nature such as land, water, mineral, oil and gas deposits, renewable and nonrenewable resources.
2. Labor:
The human effort, physical and mental, used by workers in the production of goods and services.
3. Physical capital.
All the machines, buildings, equipment, roads and other objects made by human beings to produce goods and services.
4. Human capital:
The knowledge and skills acquired by a worker through education and experience.
5. Entrepreneurship:
The effort to coordinate the production and sale of goods and services.
Entrepreneurs take risk and commit time and money to a business without any guarantee of profit.