Activity 2 page 3

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Try the Land, Labour, Capital activity to test your understanding of the factors of production.

Click on one of the links below to complete the activity.

Land, Labour, Capital Activity (Word)
Land, Labour, Capital Activity (pdf)
Land, Labour, Capital Activity (Google Doc)

Save your completed work to your Activities folder.

Unlimited needs and wants and limited resources result in scarcity. To solve the problem of scarcity, all societies must answer three basic economic questions.

• What goods should be produced?
• How should these goods be produced?
• For whom should the goods be produced?

How a country answers these questions determines the type of economy the country has and the quality of life that the society experiences.

In a market economy such as the United States, consumer choices drive all economic decision-making. Market economies are characterized by competition. Buyers compete with buyers; sellers compete with sellers. The private sector owns and controls all businesses. Supply and demand is based on consumer choices.

In a mixed economy such as Canada, consumer choices drive much of the economic decision-making. The public sector, however, does remove the role or need for consumers to be concerned about all their needs. Some goods and/or services are provided by government-owned businesses. Examples of this are universal health care and the Canadian Broadcasting Corporation (CBC), which are controlled by the government and paid for by taxes.

View the economic continuum by clicking on the link below.

You will notice that at the left there is more government control and consumer choice is less. At the right, there is less government control and consumer choice increases.

Economic continuum


Read an example of scarcity in "Economics in Action", the comic on pages 199 to 201 of your textbook, Issues for Canadians.

After reading this, think about your responses to the questions on page 201 of your textbook. To answer the questions, consider what you understand about scarcity, needs and wants, goods and services, and factors of production.

When you answered the questions, you may have considered the following:

• The game manufacturer was unable to supply enough games because of the demand. Perhaps the game manufacturer was unable to get enough parts to build the games, or the manufacturer controlled the amount of product released to build a demand. This is what Nintendo did with the Wii. By not producing enough games, consumers had a scarcity. In this way, the company created a fake demand for the product.
  

• The truckers may have gone on strike because of the increased costs they incurred such as high fuel prices or to protest labour issues such as non-union workers taking the jobs of union employees.
  

• The store may have decided to sell the game for less to have a monopoly on the market; then, customers coming to their store might purchase other more expensive products.
  

• People might purchase an item at a higher price because of demand or peer pressure to have the game.
  

Supply is about producing things consumers want.

Demand is about what the consumer wants. In the case of the Super Cyborg City game, consumer choices were driving the sales of the game.

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