People always have to make decisions about how to meet their needs and wants. A need is something people must have to survive, like air, food, and shelter. A want is something that people would like to have but is not necessary for survival. Economics is the study of how people make choices to satisfy their needs and wants.
People have to make such choices because of scarcity, the limited amounts of resources to meet unlimited desires. Goods are objects, like cars and clothes. Services are actions that people do for others, such as teaching. A shortage occurs when people have trouble supplying goods and services at current prices. Shortages may occur because of situations like war or drought. They may end quickly or last a long time.
Economists call the resourses used to make goods and sevices factors of production. There are three types: land, labor, and capital. Land includes natural resources like coal, water, and forests. Labor is work for which people recieve pay. Capital is a human-made resource used to produce other goods and services. Objects made by people, like buildings and tools, are called physical capital. Human Capital refers to the knowledge and skills people gain from study and experience. Entrepreneurs are people who put together land, labor, and capital to create new businesses.
