Assignment 1

Submitted by

Ishrat Jabin Prova

Submitted to

07.05.2017
INTRODUCTION
Human beings, unfortunate creatures, are plagued with wants . They want, among other
things, love, social recognition and the material necessities and comforts of life . Their
striving to improve their material well-being, to " make a living " , is the concern of
economics . By putting to work our productive resources both human and material, it's the
function of the economics system to organize the production , exchange and consumption of
goods and services.

However , we must recognize that the total of our wants for goods and services are
unlimited but the resources available to provide these goods and services are limited. This
unyielding fact of economics life provides the key to our preliminary definition of economics .

So, it's tempting to seek out immediately answer and solutions to the economic problem of
current concern .

Economics defined as the social science that studies the choices that individuals ,
business , governments, and entire societies make as they cope with scarcity , the
incentives that influences those choices , and the arrangements that coordinate them .

Today the range of fields of study examining the economy include social sciences such as
economics, sociology (economic sociology), history (economic history), anthropology
(economic anthropology), and geography (economic geography).

The subject is extremely broad and touches all aspects of our lives . To get beyond this
definition of economics, we need to understand the kinds of question that economists try to
answer and the way they think and go about seeking those answers.

GOODS and SERVICES

Goods and services are the objects and actions that people value and produce to satisfy
human wants . We satisfy our needs and wants by buying goods and services. Goods are
the subjects that satisfy wants . Running shoes and hand phone are the examples .
Services are actions that satisfy wants . Haircuts and rock concerts are examples . Most
products fall between these two extremes. For example, a restaurant provides a physical
good (prepared food), but also provides services in the form of ambiance, the setting and
clearing of the table, etc. And although some utilities actually deliver physical goods &
services; like water utilities which actually deliver water - utilities are usually treated as
services. In business, people sometimes talk about the marketing of products and services.
This is clearly tautological - services are products.

WHAT , HOW , AND FOR WHOM

In economies , there are 3 famous question to ask. That's what , how , and for whom that's
relates when we wants produce a product or make a business.

What - what goods to produce and in what quantities

How - how to produce them , how much and what kind of machinery

For whom - for whom to produce them , reflecting the distribution of income from output .

WHAT
We divide the vast array of goods and services produced into four large group :

Consumption goods and services

Capital goods

Government goods and services

Export goods and services

Consumption goods and services are items that are brought by individuals and used to
provide personal enjoyment and contribute to a person's quality of life . They include items
such as housing , SUVs, vitamin water and ramen noodles , chocolate bars and PO'Boy
sandwiches , movies , downhill skiing lessons , and doctor and dental services.

Capital goods are goods that are brought by businesses to increase their productive
resources. They include items such as auto assembly lines , shopping malls , airplanes and
oil tankers .

Government goods and services are items that are brought by governments. Governments
purchase missiles and weapon systems , travel services , Internet services , police
protection , roads , and paper and paper clips.

Export goods and services are items that are produced in one country and sold in other
countries.
Of the four groups of goods and services that we've just defined , consumption goods and
services have the largest share and a share that doesn't fluctuate much . The volume of
capital goods produced fluctuate as the economy cycles from boom to recession. Good and
services bought by governments are close to a fifth of total production and export goods
around one teeth.

HOW
Goods and services are produced by using productive resources . Economists call the
productive resources factors of production . Factors of production are grouped into four
categories:

-land

- labor

-capital

-Entrepreneurship

LAND
In economics , land includes all the "gifts of nature " that we use to produce goods and
services . Land is what, in everyday language , we call natural resources . It includes land in
everyday sense , minerals, energy, water, air and wild plants, animals, birds , and fish .
Some of these resources are renewable , and some are non-renewable.

Our land surface and water resources are renewable , and some of our mineral resources
can be recycled .But many mineral resources can be used only once. They are
nonrenewable resources. Of these, the United States has vast known reserves of coal but
much smaller known reserves of oil and natural gas.

LABOR
Labor is the work time and work effort that people devote to producing goods and services .
Labor includes the physical and mental efforts of all the people who work on farms and
construction sites and in factories , shops, and offices . The Census Bureau of Labor
Statistics measure the quantity of labor at work every month.

The quantity of labor increases as the adult population increases . The quantity of labor also
increases if a larger percentage of the population takes jobs.
The quality of labor depend on how skilled people are.

CAPITAL
Capital consists of tools , instruments , building , and other items that have been produced
in the past and that businesses now use to produce goods and services . Capital includes
hammers and screwdrivers, computers, auto assembly lines, office towers and
warehouses .

Capital also includes inventories of unsold goods or of partly finished goods on a production
line. And capital includes what is sometimes called infrastructure capital , such as highways
and airports.

(Financial capital is not capital )

In everyday language, we talk about money , stocks , and bonds as being capital. These
items are financial capital , and they are not productive resources. They enable people to
provide businesses with financial resources , but they are not used to produce goods and
services. They are not capital.

ENTREPRENEURSHIP
Entrepreneurship is the human resources that organizes labor , land, and capital to produce
goods and services. Entrepreneurs are creative and imaginative. They come out with new
ideas about what and how to produce, make business decision , and bear the risks that
arise from these decisions . If their ideas work out, they earn a profit. If their ideas turn out
to be wrong, they bear the loss.

FOR WHOM DO WE PRODUCE

Who gets the goods and services depends on the income that people earn. A large income
enables a person to buy large quantities of goods and services. A small income leaves a
person with a small quantity of goods and services.

People earn their incomes by selling the services of the factors of production they own. Rent
is paid for the use of land, wages are paid for the services of labor, interest is paid for the
use of capital , and entrepreneurs receive a profit ( or incur a loss) for running their
businesses.
SCARCITY
Our inability to satisfy all our wants is called scarcity. The ability of each of us to satisfy our
wants is limited by the time we have , the incomes we earn , and the price we pay for the
things we buy. These limits mean that everyone has unsatisfied wants. The ability all of us
as a society to satisfy our wants is limited by the productive resources that exists . These
resources include the gifts of nature , our labor and ingenuity , and the tools and equipment
that we have made.

Everyone , poor and rich alike, faces scarcity. For example, a students wants Beyonds's
latest CD and paperback but has only RM10.00 in his pocket. He faces scarcity. Brad Pitt
wants to spend a week in New Orleans discussing plans for his new eco-friendly housing
and he also wants to spend the week promoting his new movie. He faces scarcity. The U.S.
government wants to increase defense spending and cut taxes. It faces scarcity.

Faces with scarcity, we must make choices. We must choose among the available
alternatives. The students must choose the CD or the paperback. Brad Pitt must choose
New Orleans or promoting his new movies. The government must choose defense or cut
taxes.

OPPORTUNITY COST
The opportunity cost of something is the best thing that you must give up to get it. No matter
what you choose to do, you make a choice among many alternatives. But only one of these
alternatives is the best alternatives that you gave up. And it is the best alternatives, the
highest -valued alternative forgone, that is the opportunity cost of the thing that we choose
to do.

We use the term opportunity cost to emphasize that when we make a choice in the face in
scarcity , we give up an opportunity to do something else. We can quit school right now, or
we can remain in school. Suppose that if we quit school, the best job we can get it is at
FEDEX KINKO'S, where you can earn $10,000during the year. The opportunity cost of
remaining in school includes the thing that we could have bought with this $10,000. The
opportunity cost also includes the value of the leisure time that you must forgo to study.

Opportunity cost of the thing we get is only the best alternative forgone. It does not include
all the expenditures that we make. For example, your expenditure on tuition is part of the
opportunity cost of being in school. But your meal plan and rent are not. Whether you're in
school or working, you must eat and have somewhere to live. So the cost of your school
meal plan and your rent are not part of the opportunity cost of being in school.
CONCLUSION
Economy condition whether it's bad or good is very important to every countries. We must
get it right to make the right and best decision. Knowing well in economy also provide the
knowledge to understand the impact of developments in businesses, society and the world
economy. In this, with the right knowing of economy, we can do our businesses in very well
and earn a profit due to understand of what happen to our currency or others. With always
handing the latest economies new, it decreases the losses in businesses and it make us
easier in everything.

Reference:
https://www.ukessays.com/essays/business/wants-are-unlimited-but-
resources-available-to-provide-them-are-limited-business-essay.php