Activity 2 page 2

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Think about your needs and wants. Scarcity, in economic terms, occurs when there are unlimited wants and limited resources. Most things that people need or want are limited because limited resources are available.

Factors of production are the resources needed to produce goods and services. The term production refers to the creation of goods and services. The resources of land, labour, and capital are used to produce the goods and services.

 Vocabulary

On your Issues for Canadians Definitions handout, add the terms land, labour, and capital.

As you examine the following definitions and illustrations, write your own definition for each term.

Save your updated handout to your Activities folder.

The first factor, land, refers to the natural resources or raw materials used to produce the goods and services found in primary industries.


The second factor of production is labour, which is the work done by individuals. In secondary industries, labour consists of converting raw materials into finished products.



Labour is also necessary in tertiary industries; labour includes services provided to society.


The third factor of production is capital, which includes the money, equipment, tools, and other resources required to produce the goods and services.


 
When producing goods, the producers combine the factors of production. When producers cannot produce enough of a good to meet the demand, scarcity results.

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