Business Activity Fundamentals: Needs, Wants, and Objectives
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Chapter 1: The Purpose of Business Activity
Needs vs. Wants
- Need: A good or service essential for living.
- Want: A good or service people would like to have, but is not essential for living. People’s wants are unlimited.
Unlimited wants + Limited Resources = Scarcity (The Economic Problem)
Factors of Production
Factors of production are the resources needed to produce goods or services. All four types are limited in supply:
- Land: All natural resources.
- Labour: The efforts of the workforce used as input into the business.
- Capital: Finance, machinery, and equipment needed for production.
- Enterprise: The skill and risk-taking ability of the person who brings the other factors of production together (e.g., entrepreneurs).
Key Economic Concepts
- Opportunity