- These are desires that people have or strive to satisfy e.g. thirst is a desire for drink
- Goods and service provide by the business are intended to satisfy a human want.
Classification of human wants
- Basic/ primary wants/needs
- Are the necessities that are absolutely vital for the human survival
- They include food, shelter and clothing
- They must be satisfied first before one thinks of satisfying the rest
- Lack of basic needs may lead to death
- Secondary wants
- Are needs one can do without but are desired to make life more comfortable
- They can be categorized into comforts and luxuries
- Comforts improve ones living standards beyond the status of mere survival e.g. furniture, medication, education, utensils, transport etc.
- Luxuries are goods that provide excessive comfort e.g. cars, watches. Luxuries are for prestige purposes
Characteristics of human wants
- Unlimited– Human wants are so many that they can never be satisfied. They are insatiable.
- Varied. They change with factors like age, gender, income, geographical location and social status.
- Competitive. They compete against each other for satisfaction using the limited goods and services
- Complimentary. Satisfaction of some wants automatically leads to creation of other wants e.g. when you purchase a cell phone, you will automatically need airtime.
- Repetitive. After some wants have been satisfied once, they recur thereby creating the need to satisfy them again.
- Habitual. Some wants result in the formation of certain habits e.g. use of certain brands of toothpaste, perfumes, body lotion and beverages based on habits .
- Universal. Human wants are experienced by every human being without exception whether they are satisfied or not
- Vary in intensity. Different wants have different priority
Challenges faced in the satisfaction of human wants
- Human wants are too many and varied to satisfy fully
- The resources needed for the satisfaction of human wants are never enough
- Resources are scarce
- People must continually look for fresh resources to satisfy recurring wants
- Human wants change with time, age and gender
Goods and services
- Goods are tangible visible objects that can be used to satisfy human wants
- Services are intangible efforts or acts that can satisfy human wants. Services cannot be seen i.e. not visible
Goods can be categorized as follows
- Free goods and economic goods
- Free goods are gifts of nature e.g. sunshine, rain, oceans
- They have utility but no monetary value
- Economic goods are scarce in supply and have money value e.g. TV, books, minerals etc
- Producer and consumer goods
- Producer goods are used in producing other. They are also known as capital goods e.g. machines, equipments and tools.
- Consumer goods are readily usable by the final consumer. E.g. food, clothing, furniture, cosmetics, medicine etc
- Perishable and durable goods
- Perishable goods go bad easily unless stored using very special facilities e.g. meat, milk, vegetables, tomatoes.
- Durable goods continue giving services for a long time and can be spoiled by agents such as wear and tear e.g radio, furniture, buildings,
- Public and private goods
- Public goods belong to no one in particular but are owned by the government or by all of us collectively e.g. roads, airports, rivers, public hospitals, public parks, railways, churches etc.
- Private goods are owned by private individuals in their private capacities either singly or as a group e.g. personal cars, private schools etc.
- Intermediate goods and finished goods
- Intermediate goods are used as inputs/raw materials to be processed into a more useful form. E.g sisal, sugarcane, wood, cotton etc.
- Finished goods are final products that come out of processing in the required form (output) e.g flour from maize or wheat, dress from cotton.
- Material goods and non material goods
- Material goods are commodities that are tangible e.g food, books, chairs, vehicles, shoes
- Non-material goods are intangible e.g. teaching, nursing etc
Differences between goods and services
|· Are tangible ie can be seen, touched or felt||· Are intangible i.e. cannot be seen touched|
|· Not always exhausted during use||· Always used up or exhausted after every act|
|· Identical goods can be created through mass production||· Are difficult to make identical since they vary over tome and provider|
|· The price paid is for the possession or ownership of the good||· Price paid is the effect of the act or the effort|
|· Surplus goods can be stored for latter use||· Cannot be provided in excess and once provided cant be stored later|
|· Are easily separable from the producers||· Are inseparable cant be|
- These are inputs needed in the production process in order to produce what is required to satisfy human wants.
- They are the means by which production and provision of goods and services is made possible.
Types of economic resources
Natural resources – Are gifts of nature e.g. land, natural forests, rivers, oceans and minerals
Artificial resources – Are man made resources e.g. machinery, tools, tarmac roads, dams, railways lines etc
Human resources – Refers to mental and or physical efforts rendered by people to organizations or to other human beings in producing goods and providing services e.g. nurses, teachers, painters, drivers.
Economic resources can be divided into
- Renewable resources
- Non-renewable resources
Renewable resources are those whose supply can be restored and if not, creating goods and services is reduced and it may stop altogether
Non-renewable resources are those whose supply cannot be stored after use. Using these resources leads to their exhaustion sooner or latter
Example of renewable and non renewable resources
|Renewable resources||Non-renewable resources|
|Natural rubber||Building stones|
|Wind power||Natural gas|
Characteristics of economic resources
- They are scarce
- They have monetary value
- They are unevenly distributed
- They can be used to create goods and service
- They can be combined together in different proportions to create goods and services
- They can be transformed from one party to another
Scarcity, choice and opportunity cost
- Scarcity is used to describe the limited nature of economic resources
- Choice id the act of deciding what wants to satisfy first with the scarce or in adequate resources available. Choice is made with a list of scale of preference which is a list of unsatisfied wants arranged in order of priority
- Opportunity cost is the value of the best foregone alternative. The real cost of satisfying any want is the alternative that has to be foregone in order to do so