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Understanding Business Activity, Needs and Wants, The Economic Problem,…
Understanding Business Activity
Wants
Scarcity
The Economic Problem
Needs
Factors of Production
Land
Capital
Labour
Enterprice
Opportunity Cost
Specialization
Division of Labour
The Purpose of Business Activity
Added Value
Needs and Wants
Wants are things that we would like to have to simply enjoy.
Example: A Luxary House.
Example: Clean Water
Needs are things that we must have in order to survive.
The Economic Problem
It creates Scarcity
Finite Needs
Unlimited Wants but Limited Resources to produce the goods and services.
Infinite Wants
Scarcity
Lack of sufficient products to fulfill the wants of the world.
Limitation of limited supplies, components, raw materials and goods.
Fundamental Economic Problem
Unlimited Wants + Limited Resources = Scarcity