Scarcity, choice and the factors of production

hey guys mr. Rey here and today what I want to do is go through some basic economic concepts so you have a good foundation for the upcoming videos that I'm going to be releasing for economics

so let's start and just quickly get through this it shouldn't take me no more than five minutes and I'm gonna talk about the topics of scarcity and choice so follow with me and listen to

my examples and hopefully that clarifies for you what you need to know so we assume in economics that choice is inevitable and that's something that's faced by individuals businesses and

governments because due to scarcity which means the fact you know that resources are limited we can't have everything that we want we can't do everything that we want whether we are individuals or all the way up to

government government can't pursue every project they would like to pursue they have limited tax revenue to do that individuals have limited time and businesses as well and this concept of

scarcity is fundamental to economics tied to this concept is a trade-off so a trade-off is when you have to choose one

thing over another or as opposed to another right the situation where you can't have both but you must choose to go for one option as opposed to the

other for example if I had a week of vacation coming up in two months and I wanted to go to London or New York for that entire week I couldn't be in both places at once so the trade-off of going

to London is missing out on the trip to New York no economics is this exactly this right studying how those groups individuals

businesses and governments allocate scarce resources between the alternative uses or between alternative uses for those things for those resources so I have my time and then how do I decide

how to allocate it right that's the heart of economics now in a society we focus on the factors of production when

we talk about scarcity and looking at how goods and services are produced and there's four key factors of production that we take a look at their land labor

capital and entrepreneurship so land you can anticipate as something anything that comes from the earth right it's not man-made its extracted from the earth and that's what we would consider

land and of course land is limited second is labor right this is would be the workforce the people that go to work every day teachers doctors lawyers

mechanics engineers accountants anybody who goes to work whether it's the president or a political official somebody who goes to a job this

considered labor and there's one exception to this which I'll get to in a minute Capital encompasses all the equipment used in production so if you're thinking about a tractor for

farmer know a pizza oven for a restaurant or an oven for a restaurant for that matter any kind of equipment that they use to perform their job would

be considered capital and that brings me to the fourth one entrepreneurship now entrepreneurship is the describes that that person or the the attitude of that

person who goes and brings all the factors of production together to meet a business need the one who takes the risk to make things happen now the most common examples of entrepreneurship

people offer you know Steve Jobs Elon Musk Bill Gates amongst many others right these guys took risks brought an idea to

life and brought and created a business and I want you to think about in your life right you face trade-offs every single day from the moment you wake up you when you choose to sleep a little

bit more sleep a little bit less to when you go to sleep with time you go to bed with time yeah are you gonna play video game are you going to go to bed are you gonna continue reading are you gonna watch TV are you gonna eat pizza instead

of a salad all of these decisions are gone in one day right show you that economics is taking place every day in your life and I've put a list of questions here for you to consider right

because there's so many different outcomes if your decisions change and that's the wonderful thing about the subject that it helps you examine how those decisions are made