Needs vs Wants in Economics

Needs vs Wants

• Needs are essential for survival.
• Examples of needs include food, water, shelter, protection, clothing, healthcare and education.
• Wants are not essential for survival; they fulfill desires.
• Wants are unlimited and unsatisfiable.
• Examples of wants include travel, entertainment, luxury items, subscriptions, and new cars.

Evolution of Needs and Wants

• Needs and wants have become more varied and complex.
• Fulfilling desires often requires many people and specialist workers.

Economics

• Economics involves the distribution of resources to satisfy human wants and desires.

Production

• Production is the making or manufacturing of goods from components or raw materials.
• Production also involves the provision of important services.
• Production requires raw materials workers (labor), capital (machines and tools), and business people (entrepreneurs).
• Producers are people who make goods or provide services for others.
• Consumers are people who use the goods and services provided by the producers.

Types of production

• Primary Production involves the extraction of natural resources from the earth.
• Examples include timber, seafood, and vegetables
• It is also known as the extractive industry.
• Secondary Production comprises the manufacturing industry and revolves around converting raw materials into finished goods.
• This also includes the constrictive industry.
• Factory workers and construction workers are examples.
• Tertiary Production involves providing services to others.
• It includes the commercial or distributive industry, such as advertising, insurance, and transportation services.
• It also includes direct service jobs like lawyers, doctors, and teachers.

Commerce

• Commerce encompasses the activities involved with the making, buying, selling, and distribution of goods and services.
• Goods are material things (tables, cars, toothpaste, pencils).
• Services are non-material things (haircuts, bus journeys, telephone calls, internet access).

Trade

• Trade involves the exchange of goods and services.
• Home trade is buying and selling of goods within a country.
• Foreign trade is business done with other countries.
• Import is the purchase of goods and services from another country.
• Export is the sale of goods and services to another country.
• Wholesaling is buying goods in large quantities from producers and selling them to retailers.
• Retailing is buying goods from wholesalers and selling them in small quantities to consumers.

Aids to Trade

• Aids to trade are services that facilitate trade and make it more efficient.
• There are six aids to trade: Communication, Advertising, Banking, Insurance, Transportation, and Warehousing.
• Communication enables the efficient passing of information.
• Advertising is a form of communication that increases demand for goods and services.
• Banking provides buyers and sellers with finances and helps them collect and pay for goods and services.
• Insurance lowers losses suffered by buyers and sellers against damages and accidents.
• Transportation facilitates the movement of raw materials, goods, and services.
• Warehousing provides a place for storage or repacking.

Explore the distinction between needs and wants in economics. Needs are essential for survival, while wants are desires. Understand how production involves using raw materials, labor, capital, and entrepreneurial skills to create goods and services.