Economics is the study of the use of scarce resources to satisfy unlimited human wants.Scarcity is inevitable and is central to all economies and all economic
problems. What are society’s resources? Why is scarcity inevitable? What
are the consequences of scarcity?
Resources
A society’s resources are often divided into the three broad categories of
land, labour, and capital. Land includes all natural endowments, such as
arable land, forests, lakes, crude oil, and minerals. Labour includes all
mental and physical human resources, including entrepreneurial capacity
and management skills. Capital includes all manufactured aids to
production, such as tools, machinery, and buildings. Economists call such
resources factors of production because they are used to produce the
things that people desire. We divide what is produced into goods and
services. Goods are tangible (e.g., cars and shoes), and services are
intangible (e.g., legal advice and education). People use goods and
services to satisfy their wants. The act of making them is called
production , and the act of using them is called consumption.