Unit 1
Unit 2
Introduction to Economics
Resources
With both needs and wants to be satisfied, we will need to make some decisions about the things that we will make. To do this, we must first examine the resources that we have available to us.
In Economics, the word resource is used to describe the factors of production that we have available to us. They are the things that we combine to make other goods and services. We group these resources under four broad headings:
Land : The word “land” is used to describe any naturally occurring resource. For example, wind, sunshine and rain are all land resources.
Labour: When a person works, they are using their labour resource. No matter what type of work people do, they are choosing how to allocate their labour.
Capital: Capital resources are any physical items which are used to make other goods and services. Many students get confused here, because the word “capital” is used in Accounting in a different way. In Economics, the word capital does not refer to money. A hammer owned by a carpenter is a capital resource.
Enterprise: Enterprise is the skill of combining the other factors of production to provide a good or service. A person who uses their enterprise skills is also willing to take on the risk that is associated with doing so.
Over time, countries have used many different methods to try and increase their available resources. In the seventeenth and eighteenth centuries, sailors from many European countries set out to try and find new lands to settle. In more recent times, certain aggressive leaders have tried to take land by invading existing countries. Yet another approach has been used in Singapore and the Netherlands – in these countries soil has been moved to the coastline in order to slowly expand the size of their land.
The labour resource can be increased by encouraging more people to work. This could be by increasing the population through migration and the rate of natural increase, or it could be by rewarding people for staying in the workforce for longer periods in their life. You will examine these issues in more detail later in the course.
Our stock of capital resources can only be increased if people are willing to invest their money in the purchase of assets. The return on this type of investment can be slow, and so the government in many countries will work to encourage investment from the private sector.
And finally, enterprise skills can be learned. In fact, in choosing to study Economics you are well on your way to gaining some of these skills. In recent years, the government has acted to ensure that Economics is now classified as “essential learning”. The willingness to take on risk, and an understanding of the way in which this process can be managed is essential for the long term prosperity of this country.
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