Economic is the study of how society chooses 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 labour resources.
Natural resources are provided by natural n limited amounts; thy
included crude oil, natural gas, mineral, timber, and water. Natural resources
must be processed to become a product or to be used 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 types of goods and services. Some
capital resources are called current assets. They have a short life are used
and are used up in the production process. These resources include fuel, raw material, paper, and money. Long- lived
capital resources, which can be used repeatedly in the production process, are
called fixed capital. Example include factory building, machinery, and means of
transportation.
Labour resources represent the human talent. To have value in the
labour force, individual must be trained to perform either skilled or
semiskilled work. For example, the job of manager requires extensive training,
whereas only minimal training is need to operate a service station’s gas pump.
Good and Services
The resources are used to produce
goods and services that will satisfy people’s need and wants. Goods are
tangible items made by business, such as shoes and cars. Services are tangible
items, things that can’t be held, touched, or seen, provided by organizations
for their customers. For example, medical are and hair cutting. Needs are goods
and services people must have simply to
exit, such as food, clothing and shelter. Wants, on the other hand, are thing
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.
Resources Allocation
The process of choosing how
resources will be used to meet people’s need and wants is called allocation. All
countries face 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 a choice 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 og goods and services to consumer. Allocation also involves an
Exchange(e.g, money, goods, time, service) between a business and consumer. The
business earn a profit and the consumer is satisfied with the good or service.
The Exchange provides mutual benefit.
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