Introduction to Economics

Needs & Wants
IGCSE in Economics
Learning Objectives
1) To understand needs and wants.
2) To identify how needs and wants change

over the different stages of the personal
lifecycle.
 Make a list of what you think are very
important items without which you will not
survive and those items which are luxuries.
Needs
 Essential goods or services necessary for living.
 Satisfy the basic things for life.
Wants
 Non-essential goods and services that people would
like to have.
 Interests & Tastes
Needs
Wants
Think ahead to your 18th birthday. You might be about to go to
University, or you might have a full-time job. You could be driving
and may have left home. What will your need and wants be then?
Write down three things you’ll need and three things you’ll want
at age 18:
Needs Wants
1) To understand needs and wants.
2) To identify how needs and wants change over the

different stages of the personal lifecycle.
If so, Put a tick or a next to each objective!

THE ECONOMIC PROBLEM
The shortage of goods & services

TOO FEW FACTORS OF PRODUCTION!
Land Labour
Factors of Production
Capital Enterprise
All of the natural resources provided by nature
All people’s efforts to make products
All finance, machinery & equipment in manufacturing products
All people that have skills & have risk-taking ability  factors of production  produce good or service
THE ECONOMIC PROBLEM
Land Labour
Factors of Production
Capital Enterprise
Limited in Supply
 Each of these factors of production is paid by business
◦ e.g. The payment for land is rent
 Can you think what we call the payments for the other
factors?
◦ Labour wage/salary
◦ Capital interest
◦ Entrepreneurs
profit
REAL ECONOMIC PROBLEM
Unlimited Limited
Wants + Resources = Scarcity
LIMITED RESOURCES: CHOICE
Individual Business Government

SUMMARY - ECONOMIC PROBLEM
LIMITED RESOURCES
PRODUCTION 200 YEARS AGO
1 2 3 4
Joe cuts He Joe Joe delivers the table on a

the wood assembles polishes the horse and cart
the table table
LIMITED RESOURCES
MODERN DAY PRODUCTION
1 2
The wood for 20 tables is cut Carpenters assemble the

with a specialist machine tables
3 4
The tables are finished in the A transport company collects the tables to
polishing department deliver them to furniture retailers
MAKING THE BEST USE OF LIMITED RESOURCES
Specialization / Division of Labour
◦ Production Process
◦ Different tasks split up
◦ Workers performs a task

SPECIALIZATION – DIVISION OF LABOUR
 Advantages
◦ Specialized task training
◦ Increases efficiency
◦ Increases output
◦ Save time
 Disadvantages
◦ Bored workers
◦ Possible drops in efficiency
◦ Production stopped due to absence
WHY BUSINESS ACTIVITY IS NEEDED?
 Unlimited wants
 4 factors of production
◦ Resources in limited supply to make goods and services
 Scarcity
◦ Limited resources – unlimited wants
 Choice
◦ Opportunity Cost
 Specialization
◦ Improves efficient use of resources
BUSINESS ACTIVITY
 COMBINES S_____ F_____OF P_______ IN ORDER TO PRODUCE

G_____ AND S_______.
 PRODUCES THOSE GOODS AND SERVICES WHICH ARE NEEDED TO

S______ THE N______ AND W_____ OF THE P___________
 E_______ PEOPLE AS WORKER AND PAYS THEM W____ /

S______ TO ALLOW THEM TO CONSUME P_______ MADE BY
OTHER P________.
AIM OF BUSINESSES
 Combine factors of production

 Produce products
 satisfy peoples wants
CLASSIFICATION OF PRODUCTS
 Goods  Services
◦ Physical items ◦ Intangible
◦ Tangible
◦ Touch and see
BUSINESS OBJECTIVES
 Aim / Target to work towards

◦ Make a Profit
◦ To increase added value
◦ To expand the business
◦ To achieve business survival
◦ To provide a service
PROFIT
VALUE ADDED
Cost of
Selling
Price - materials/
Components
= Value
Added
GROWTH
SURVIVAL
PROVIDING A SERVICE
CONFLIT IN BUSINESS
CONFLIT IN BUSINESS
GROUPS INVOLVED IN BUSINESS
owners managers workers
Business
Stakeholders
consumers community government

EXPLAIN AND PROVIDE EXAMPLES FOR:
 The difference between wants and needs, with examples

 Scarce resources
 Principle of opportunity costs
 Importance of specialization in production
 Purpose of business activity
 Importance of different groups in business activities.

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Needs & Wants

1) To understand needs and wants.

2) To identify how needs and wants change

2) To identify how needs and wants change over the

If so, Put a tick or a next to each objective!

The shortage of goods & services

Individual Business Government

Joe cuts He Joe Joe delivers the table on a

The wood for 20 tables is cut Carpenters assemble the

Specialization / Division of Labour

◦ Different tasks split up

◦ Workers performs a task

 COMBINES S_____ F_____OF P_______ IN ORDER TO PRODUCE

 PRODUCES THOSE GOODS AND SERVICES WHICH ARE NEEDED TO

 E_______ PEOPLE AS WORKER AND PAYS THEM W____ /

 Combine factors of production

 Aim / Target to work towards

owners managers workers

consumers community government

 The difference between wants and needs, with examples

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 COMBINES S___ F_OF P_____ IN ORDER TO PRODUCE

 E___ PEOPLE AS WORKER AND PAYS THEM W /