Society material wants are scarce resources

Question

Explain the foundation of economics where society’s material wants are scarce resources?

Answer 1

The foundation of economics is the economizing problem where society’s materials wants are scarce resources (the second fundamental fact) are:

1. Economic resources are limited relative to wants.

2. Economic resources are sometimes called factors of production and include four categories:

a. Land or natural resources.

b. Capital or investment goods which are all manufactured aids to production such as equipment, transportation, factories, tools etc.

c. Labor or human resources, which include physical and mental abilities used in production.

d. Entrepreneurial ability, a special kind of human resource that provides four important functions:

i. Combines resources needed for production,

ii. Formulate policy resolutions of a business,

iii. Is an innovator for new products, production techniques, organizational forms,

iv. Bears the risk of effort, funds as well as time.