Economic goods are scarce in relation to the demand for them
This makes them valuable
Due to their value, producers will attempt to supply them in order to make a profit
Anything that has a price tag on it is an economic good e.g. oil, corn, gold, trainers, watches and bicycles
Free goods are abundant in supply
Due to this abundance, it is not possible to make a profit from supplying free goods
Drinking water has been a free good for thousands of years, but as the population increases & water sources become more polluted, it has become an economic good
E.g. sunlight, the air we breathe, sea water
Factors Of Production
Factors of production are the resources used to produce goods & services
Land, labor, capital & enterprise
The production of any good/service requires the use of a combination of all four factors of production
Goods are physical objects that can be touched (tangible) e.g. mobile phone
Services are actions or activities that one person performs for another (intangible) e.g. manicure, car wash
4 Factors Of Production
All Factors Of Production are Land , Labor , Capital And Entrepreneurship
Land : Non man-made natural resources are available for production. Some countries have a vast amount of a particular natural resource & so are able to specialize in its production e.g. oil, wood, fish, corn, iron ore
Labor : The human input into the production process. Labour involves mental or physical effort. Not all labour is of the same quality. It can be skilled or unskilled. Some workers are more productive than others because of the education, training & experience they have
Capital : Capital is any man-made resource that is used to produce goods/services e.g. tools, buildings, machines & computers
Enterprises : Enterprise involves taking risks in setting up or running a firm. An entrepreneur decides on the combination of the factors of production necessary to produce goods/services with the aim of generating profit