IGCSE Economics Unit 1 – The Basic Economic Problem and Factors of Production

IGCSE Economics

Unit 1 – The Basic Economic Problem and Factors of Production

Learning Outcomes

• Define the nature of the economic problem• Define the factors of production

What is Economics?

• A social scienceThe study of the interactions

between:• Humans• Institutions • Organisations• Natural Environment• Social environmentLooks at the decisions and choices

that are made

NEEDS AND WANTS

What do we need and what do we want?

• Make a list of 10 items that you need

• Make a list of 10 items that you want

What is the difference between a need and a want?

How many needs and how many wants do you have?

• Will there be a difference between your needs and wants and those of these children?

• Why?

Why do I want what I want?

• The creation of wants!!

• I’m going to show you some slogans used by businesses that aim to create wants

• Can you recognise what brands they are trying to sell?

Name that brand?

1. American by Birth. Rebel by Choice. 2. There is no substitute. 3. Save Money. Live Better. 4. Impossible is Nothing. 5. Between love and madness lies obsession.6. Quality never goes out of style. 7. The Happiest place on Earth8. Because I’m worth it9. What’s the worst that could happen?10.Taste the Rainbow

Your turn….

• In pairs• Try to write down 4 catch phrases or

slogans used by advertisers

Key Points:

• Needs are the things that we require for survival. These needs are finite

• Wants are the additional things that people would like to have. Wants are infinite.

GOODS AND SERVICES

Satisfying Needs and Wants

• In order to satisfy the needs and wants of consumers businesses will make PRODUCTS

• Products are categorised into Goods and Services

The difference between a good and a service?

• Are all products a pure good or a pure service?

Key Points

• Goods and Services are the products made to meet people’s needs and wants

• Goods are tangible• Services are intangible• In order to make Goods and Services

resources are required

PRODUCING GOODS AND SERVICES

Production of Goods and Services

• Resources will be required.

• Lets have a think about what these resources might be?

What resources are needed to make this pencil?

FACTORS OF PRODUCTION

Good or Service

Land

Labour

Capital

Enterprise

Why are each of these factors of production important?

Task

• Can you now add any more resources to your list?

• Categorise the resources in your list into the four factors of production

Task – sort these resources for making and selling orange juice into the 4 factors of

production

• Fertile soil• Squeezing

machines• Orange Pickers• Packaging

machines• Package designers• Calculators• Water• Oil• Lorries• Printing machines• Orange Trees• Power Stations• Coal• Warehouse workers• Lorry drivers• Wood

• Telephones• Advertising executives• Shops• Ships Crew• Factory Buildings• Drinks tasters• Insecticide sprays• Oranges• Roads• Accountants• Shop Assistants• Dock Workers

Using inputs (resources) to make outputs (goods and services) to satisfy the needs and wants of consumers

Production

Using up goods and services (products) to satisfy consumers’ needs and wants

Consumption

Question….

• Is it possible to produce enough goods and services to satisfy the needs and wants of everyone?

• Why?

Human wants are unlimited but resources are limited

This is called…..The Basic Economic

Problem

Task

• Look at the headlines on the next slide.• For each one answer the following…

a.What is the limited resourceb.What factor of production would this fall

intoc.What are the implications of this shortage?d.What could be done?

Task

SCARCITY

Task – 2 mins

• In pairs.• Write a definition for the word ‘Scarcity’

Scarce Resources

• Are all of these resources scarce?• Can you rank them from the least to the

most scarce?

Questions?

• What happens to the value of resources as they become more scarce? Why?

• Can you think of some resources that are not scarce?

• Should we use scarce resources?

Key Points

• Scarcity in economics refers to any resource that is not unlimited

• Goods which are scarce are called Economic Goods

• Resources that are not scarce are called Free Goods

• The more scarce a resource is, the more valuable it becomes in monetary terms