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Needs-and-Wants

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28 views5 pages

Needs-and-Wants

Uploaded by

hungrymail6226
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Needs and Wants

Needs Wants
We often use the words needs and wants as though they Wants, on the other hand, are items we would like to
mean the same thing. But needs are items we must have have but won't die without. These are things like a new
in order to live, like food, shelter, and clothing. T-shirt or a new CD.

Our wants can also influence the way we satisfy our needs. If you need food, you may choose to satisfy this need by
eating a burger or a pizza, because this is what you want.

by Pri Pri
Demand and effective demand
Desire

When you want something, you create a demand for it.

Ability

However, you cannot satisfy your want unless: • you


have the money and • you are willing to pay for it.

Willingness

For example, while you may want a new pair of trainers,


you cannot satisfy your want unless: • you have the
money to pay for the trainers and • you are willing to
spend your money on them (you may prefer to spend
the money on books or a sweater).

Effective Demand

Even so, your demand for trainers will not be successful


unless other people want trainers and are able and
willing to pay for them, too. Businesses will not make
trainers if you are the only person who wants them.
This is effective demand. People create effective
demand when enough of them want something and are
able and willing to pay for it
The purpose of business activity
Private Businesses Public Enterprises

Businesses are organisations that create and sell goods Some organisations are run by the government to
and services. They sell to individuals and other provide services to society. These include hospitals,
businesses. There are many different types of libraries, leisure centres, and other similar
businesses. Some are large companies, like Kuwait organisations. Businesses owned and run by the
Petroleum Corporation or Coca-Cola. Others are government are public enterprises. They are in the
smaller businesses, like shops, plumbers, and builders. public sector.
These businesses are owned and run by individuals.
They are private businesses or enterprises, and are in
the private sector.

Non-Profit-Making
Organisations

A third type of enterprise is non-profit-making. Non-


profit-making organisations include charities and
voluntary organisations. These are set up to fulfil a
social need or to provide help to a specific section of
the community. All organisations in the public and
private sector are involved in some form of business
activity. It is only their objectives of what, for whom and
why they produce goods and services that differ. We
will look more closely at these different objectives in
Unit 5. Neither non-profit-making organisations nor
public sector organisations have profit as a high
priority. The key difference is that the public sector is
run by, or on behalf of, the government whilst non-
profit-making organisations could easily be set up by
private individuals who feel they want to support a
specific cause. The government will focus on the social
needs of the wider society and try to provide financial
and other forms of assistance to ensure a basic
standard of living for all members of society.
Deciding what to produce
Choice
Since the resources needed to produce goods and
services are scarce, a choice must be made as to
what to produce from them. For example, furniture
and houses can be made from timber, but a table
cannot be made from the same timber that is used
Finite Resources to build a house. Therefore a decision has to be
Everything found on Earth is finite, or in limited made whether to cultivate trees for furniture or for
supply. This includes resources such as • crude oil houses. Similarly if a government spends too much
used to make petrol • metals such as aluminium and money building new schools, it will not be able to
gold. spend very much on training extra doctors

1 2 3

Scarcity
There are enough of some resources, such as air, to
satisfy everybody’s needs. But most resources are
not plentiful enough for this. Where this is the case,
the resource is said to be scarce. This even applies to
resources like trees or wheat that are renewable and
replace themselves either naturally or through
careful management
Cost and opportunity cost
Financial Cost Opportunity Cost
If you want a pair of trainers and a sweater but only There is also an opportunity cost – the possibility of
have enough money to buy one of them, you have to buying and enjoying the use of the other item. • If
choose which to buy. Both the trainers and the you buy the trainers, the opportunity cost of the
sweater cost money. That is their financial cost. trainers is the sweater. • If you buy the sweater, the
opportunity cost is the trainers.

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