Needs vs. Wants
What is a need?
A need is something essential for survival, such as food, water, shelter, and clothing.
What are the four factors of production?
Land, labor, capital, and entrepreneurship.
What does scarcity mean in economics?
Scarcity refers to the limited availability of resources relative to the unlimited wants of individuals and societies.
What is an economic system?
An economic system is the structure through which a society allocates resources and distributes goods and services.
Give an example of a want and explain why it is not a need.
Example: A smartphone is a want because while it enhances convenience and communication, it is not essential for basic survival.
Define 'capital' in the context of factors of production.
capital refers to man-made resources such as machinery, tools, and buildings that are used to produce goods and services.
How does scarcity affect supply and demand?
Scarcity increases demand for a limited resource, often leading to higher prices as consumers compete for the available supply.
Name and briefly describe the four main types of economic systems.
How do needs and wants influence consumer behavior?
Needs drive necessary spending, while wants fuel discretionary spending. Consumers prioritize needs but often allocate money towards wants when they have surplus resources.
How does labor contribute to the production process?
Labor refers to the human effort, both physical and intellectual, used in the creation of goods and services.
Provide an example of scarcity and its impact on pricing.
Example: During a drought, water becomes scarce, leading to increased demand and higher prices for bottled water and irrigation services.
How do command and market economies differ?
Command economies are controlled by the government, while market economies rely on individual decisions made in free markets.
Why is it important to differentiate between needs and wants in economics?
Differentiating between needs and wants helps in resource allocation and economic planning, ensuring that essential goods are prioritized in production and distribution.
Explain how natural resources are classified as a factor of production.
Natural resources, or land, include all resources that come from the earth such as minerals, water, and timber, and are used as raw materials in production.
Why is scarcity considered a central concept in economics?
Scarcity forces individuals and societies to make choices about how to allocate limited resources, which is the foundation of economic theory.
1. Identify a country that has a command economy.
2. Identify a country that has a mixed economy.
Command Economies: Cuba, North Korea, and the former Soviet Union.
Mixed Economy: United States, England, France, and India
Discuss how understanding needs and wants can impact personal financial decisions.
Understanding the difference can help individuals prioritize essential expenses (needs) and limit spending on non-essential items (wants), leading to better financial management and saving habits.
Discuss the role of entrepreneurship in the factors of production.
Entrepreneurs organize the other factors of production—land, labor, and capital—to create goods and services. They take risks and innovate to drive economic growth.
Analyze how scarcity forces individuals and societies to make choices.
Scarcity requires individuals to prioritize their needs and wants, making trade-offs and sacrifices. For societies, it necessitates decisions about production, distribution, and consumption of goods and services.
Discuss the advantages and disadvantages of a mixed economy.
Advantages: Combines the efficiency of markets with the social safety nets of government intervention.
Disadvantages: Can lead to government overreach or market failures.