Needs are things we must have to live. Wants are things we would like to have but can live without.

Needs: food, water, shelter, basic clothes

Wants: expensive phone, designer clothes, holidays, luxury car

Businesses make goods and services. People buy these products with money. Businesses use this money to pay workers. Workers then buy more goods and services. This creates a circle that keeps the economy moving.

The four factors of production are:

• Land: Natural resources like forests, oil, farmland
• Labour: Workers and their skills, like teachers or builders
• Capital: Man-made tools like machines, computers, buildings
• Enterprise: Business ideas and risk-taking, like starting a new company

Opportunity cost is what you give up when you make a choice.

If Sarah picks the city center, she gives up the money she could save with lower rent in the suburbs.

If she picks the suburbs, she gives up the extra customers from the busy city center.

She must decide which choice gives her the best benefit.

Advantages:

• Workers become faster at their job
• Better quality work because workers practice the same task
• Easy to train workers for one specific job

Disadvantages:

• Workers get bored doing the same thing
• If one worker is sick, production stops

Scarcity means we don’t have enough resources for everything we want. There are limited materials, time, and money, but people’s wants are unlimited. This forces businesses and people to make choices about what is most important.

John should use specialization. This means each worker focuses on fixing only one type of phone. Workers will become experts and work faster. They won’t waste time learning different phone types.

Businesses look at what they could make with their resources. They choose the option that gives the best profit. The opportunity cost is the profit they give up from the next best choice.

Example: A factory can make 100 phones OR 50 tablets. If they choose phones, the opportunity cost is the profit from 50 tablets.

Capital is man-made things used to make products:

• Machines in factories
• Computers in offices
• Buildings like shops and warehouses

Labour is the work people do. Enterprise is the ideas and risk-taking that starts businesses.

An entrepreneur has the idea, takes risks, and organizes everything. Workers follow instructions and do the actual work. Both are needed but they are different roles.

Making profit is very important for businesses to survive and grow. But businesses also want to:

• Help customers by solving their problems
• Create jobs for people
• Be good for society

Profit helps businesses do these other things. Without profit, businesses fail and cannot help anyone.

Scarcity forces businesses to choose carefully. They cannot have everything they want.

Example: A small business has $1000. They can buy new equipment OR pay for advertising, but not both. They must choose what will help their business more.

This decision involves:

• Capital: Buying machines to replace workers
• Labour: Fewer workers needed, some may lose jobs
• Enterprise: The business owner must decide if automation is worth the cost

In a restaurant:

• Kitchen: One chef makes starters, another makes main courses, another makes desserts
• Front: One person takes orders, another serves food, another handles payment

Advantages: Faster service, better quality, clear responsibilities

Problems: Workers get bored, restaurant struggles if one person is absent

Businesses can manage scarce resources by:

• Making the most popular products first
• Training workers to be more efficient
• Using technology to reduce waste
• Planning ahead for busy periods

When businesses hire workers, they pay wages. Workers spend this money on goods and services. This creates demand for more products. More demand means businesses need more workers. This cycle continues and helps the economy grow.

Understanding needs vs wants helps businesses:

• Set prices – people pay more for needs
• Choose what to make – needs sell even in bad times
• Plan marketing – different strategies for needs and wants

Maria should think about:

• Will new equipment make more money than hiring someone?
• What does her business need most right now?
• Which choice will help her business grow more?

The opportunity cost is the benefit she gives up from the choice she doesn’t make. She should pick whatever gives her the biggest benefit.

Technology has changed work by:

• Machines doing jobs people used to do
• Workers needing computer skills
• People working from home using technology
• Making workers more productive

Technology creates new types of jobs even as it replaces old ones.

Enterprise is important because it:

• Brings new ideas – like Steve Jobs creating the iPhone
• Takes risks – like starting Amazon as just an online bookstore
• Solves problems – like creating ride-sharing apps
• Organizes other factors – combining land, labour and capital in new ways

Without enterprise, nothing new would happen in business.