9. What is the reason people cannot satisfy all their wants and needs?

One of the things that young people discover as they grow older is that you can not have everything. You are reminded of it every time you shop.

Neither individuals nor societies can have all the things they would like to have. There simply is not enough of everything to go around. Economists note that there is no limit to the people wants. There is, however, a limit to the resources, things used to produced goods and services, available to satisfy those wants. Once that limit is reached, nothing else can be produced.

In other words, when a nation’s resources are fully employed, the only way it will be able to increase the production of one thing will be by reducing the production of something else.

That is why the reason people cannot satisfy all their wants and needs is the scarcity of productive resources.

10. What are the factors of production?

Factors of production are resources that go into the creation of goods and services. Each factor of production has a place in the national economy, and each has a particular function. Traditionally, economists have noted four factors of production: land, labour, capital, and entrepreneurship.

As an economic term land means the gifts of nature or natural resources not created by human efforts.

The second factor of production is labour — people with all their efforts and abilities.

The third factor of production is capital — the tools, equipment and factories used in production of goods and services.

Today, another factor of production has become vitally important. The fifth factor of production is information. This is a computer age, and business can not compete without information about markets, financial conditions, and other important business conditions.

11. What does the term “land” mean?

Land is one of the factors of production. As an economic term land means the gifts of nature or natural resources not created by human efforts. They are the things provided by nature that go into the creation of goods and services. Land is not only land itself, but also what lies under the land (like coal and gold), what grows naturally on top of the land (like forests and wild animals), what is around the land in the seas and oceans and under the seas and oceans (like fish and oil). It includes deserts, fertile fields, forests, mineral deposits, rainfall, sunshine and the climate necessary to grow crops.

Because there are only so many natural resources available at any given time, economists tend to think of land as being fixed or in limited supply. There is not enough good farmland to feed all of the earth’s population enough, sandy beaches for everyone to enjoy, or enough minerals to meet people’s expending energy needs indefinitely.

12. What does the term “labour” mean?

Labour is one of the factors of production. Labour — people with all their efforts and abilities. Labour is a resource that may vary in size over time. Historically, factors such as population growth, immigration, famine, war and disease have had a dramatic impact on both the quantity and quality of labour. The amount of labour will depend ultimately on the population of the country (or the world, if people can immigrate), and on the number of people who are available to work.

Labour is the human input into the production process. It may be mental or physical. But in many tasks it is necessary to combine mental activity with physical effort. The price paid for the use of labour is called wages. Wages represent income to workers, who own their labour. Land and labour are often called primary factors of production. It is one whose quantity is determined outside the economy.