Needs → those things that are necessary for living.
Wants → those things that you would like to be able to own.
Needs are very limited, but wants are unlimited.
The economic problem results from there being unlimited wants but limited resources to produce the goods and services to satisfy those wants.
The real cause of the economic problem is not because of the lack of money, but because of having too few factors of production (resources needed to produce the goods and services). The four factors of production are:
- Land: Natural resources provided by nature and the land the business is on.
- Labour: Effort of employees.
- Capital: Money and equipment.
- Enterprise: Skill and risk taking ability of the person who brings the other factors of production together to produce a good or service. There people are called entrepreneurs.
