Economics is the study of how a society choose to use scarce resources to produce goods and services and to distribute them to people for consumption. A nation's resources consist of natural, capital and labor resources.
Natural resources are provided by nature in limited amounts; they include crude oil, natural gas, mineral, timber and water. Natural resources must be processed to become a product or to be used to produce other goods and services. For example, trees must be processed into lumber before they can be used to build homes, shopping malls, and hospitals.
Capital resources are goods produced for the purpose of making other types of goods and services. Some capital resources are called current assets. They have a short life and are used up in the production process. These resources include fuel, raw materials, paper and money. Long-lived capital. Examples include factory building, machinery, and means of transportation.
Labor resources represent the human talent. To have value in the labor force individuals must be trained to perform either skilled or semiskilled work. For example, the job of manager requires extensive training, whereas only minimal training is needed to operate a service station's gas pump.
Goods and Services
The resources are useh to produce goods and services that will satisfy people's need and wants. Goods are tangible items made by businesses, such as shoes and cars. Services are intangible items, things that can't be held, touched, or seen, provided by organizations for their customers. For example, medical care and hair cutting. Needs are goods and services people must have simply to exitst, such as food, clothing, and shelter. Wants, on the other hand, are things they would like to have but do not absolutely need for survival. For example, video recorder, cassettes and luxury vacations. Goods and services are produced and designed to satisfy wants of consumers.
Resource Allocation
The process of choosing how resources will be used to meet people's need and wants is allocation. All countries face the economic problem of limited resources and unlimited wants. Because we live in a world in which the quantity of all resources is limited, we must make choices about how to use these scarce resources. We have a basis for choosing the way of using and allocating the resources to satisfy our wants and needs.
The allocation involves the distribution of goods and servives to consumer. Allocation also involves an exchange (e.g. money, goods, time, service) between a business and consumer. The business earn a profit ant the consumer is satisfied with the good or service. The exchange provides mutual benefit.
0 comments
Post a Comment