Activity No. 2.

Introduction to Economics (Essay) Submitted by: _____________________

Please write your answers below each question.

1. What examples of the factors of production are used to build a restaurant? Explain how each
of them is used.

Capital Investment

Capital Investment is the money being invested in the business. There are various aspects that
money can be applied such as location, Building, Machinery/ Equipment.

Materials/ Ingredients

Materials/ingredients are any goods used in the manufacturing of other goods. Since the goods
being produced in a restaurant is food, materials/ingredients could include things like potatoes,
hamburger patties, condiments, etc.

Supplies

Supplies are the raw materials that do not become part of a new product, so basically the items
that may contribute overall to the restaurant but are not actually to be purchased by the guests to
eat! For a fast food restaurant, this could include things such as napkins, plastic utensils, cups,
straws and lids.

Management

Management is a term used to describe the people who oversee the factors of production, and
make decisions that can benefit the business. A manger in a restaurant typically oversees the
employees and how well they are completing their job.

Training

Training is a process an employee undergoes to help better themselves at their particular job.
Training is most often taught by a manager or another knowledgeable employee.
Labour

Labour is the physical and/or mental work that is needed to produce a good or service. In this
case, both are being produced. An employee will do things like prepare food, which is producing
a good. Or they can do things like cleaning, taking orders, etc. which contributes to the overall
atmosphere and service aspect.

2. Explain how labor becomes scarce when there are many people who are unemployed.
The law of supply and demand prevails. When a large pool of potential workers are competing
for fewer jobs than there are bodies to fill them, this creates a scarcity of labor. Conversely, when
there are many jobs and few potential workers, this represents a scarcity of workers.

3. Give some factors that affect human wants and explain how each affects human wants.

Human wants originate by several factors. Following factors influence human wants.

Biological needs:
Biological needs of human beings are basic wants. They are called necessaries of life. These
basic wants relate to food, clothing and shelter. They need to be satisfied from biological point of
view.

Social environment:
Many of our wants are influenced by society in which we live. Prevailing standards of society
result in particular type of wants relating to the type of food we eat, the style of clothes we wear,
the form of houses we build etc.

Education:
Wants are related to man’s level of education; children studying in schools need less of writing
or reading materials as compared to those studying in high schools or colleges. With education
an individual standard of living, mode of life and ideas change and his wants go on increasing.

Snob appeal:
A sense of ego and false sense of status result in increasing wants of some people. Examples of
expensive jewelries, ornaments etc have snob appeal leading to more wants.

Habits:
People get habituated to use certain articles which they do not give up like cigarettes, pan etc.
These become recurring wants.

Income:
Wants are influenced by income. Wants of high income people are more compared to those of
poor people.

Fashions:
Changing fashions in modern times increase the number of wants. They relate to dress style etc.

Occupation:
Different people need or want different type of goods relating to their occupation i.e. farmers,
doctors’ teachers etc. they need different equipments and facilities and their wants increase in
their profession.

Climate:
Climatic conditions compel people to go in for articles to suit the climate like woolen wear
during winter.

Tastes:
Individuals have taste for particular consumer articles such tastes influence wants individuals.
Taste for eatables tea or coffee etc.
Inventions and Innovations:
Scientific inventions may lead to their commercial applications. These in turn create new wants
for people. Innovation lead to creation of different type of products resulting new products and
wants for them.

Advertising and Propaganda:

Commercial establishments advertise their products creating demand for them resulting in new
wants of people

4. How is economics related to your degree program?