This video is Part 4 of a 5 part series which explores the economic concept ‘scarcity’. Parts 3 and 4 of this series look at scarcity in regards to factors of production. There are four economic factors of production. They are as follows:
- Land
- Labour
- Capital
- Entrepreneurship
Part 3 of this series focused on land. Part 4 of this series focuses on labour, capital, and entrepreneurship.
Labour
Labour consists of people. People have needs and wants. People can also address the needs and wants of those around them. Labour shortages can occur when there are too few people or people do not have the required skills to address the needs and wants of society. Labour shortages can be a short term problem which can be addressed through upskilling and education.
Capital
Capital relates to investments made to improve the efficiency of other factors of production such as labour. Capital can be machinery, buildings, equipment, vehicles, or gadgetry. A scarcity of capital will reduce the efficiency of other factors of production. Scarcity of capital occurs when there is insufficient investment.
Technology can greatly improve the quality of capital. This improvement in capital has improved labour efficiency. The benefits of improved labour efficiency is rarely passed onto labour through substantially higher wage rates.
Entrepreneurship
Entrepreneurs are the risk takers that make investments. Entrepreneurs help the growth of capital. They add to both competition and cooperation between firms and industries. Scarcity of entrepreneurship occurs because of barriers to entry and high risks of business failure (actual or perceived). Scarcity of entrepreneurship is often contrived by those existing in the industries in order to reduce competition and maintain profits.
Other sources of information
Part 1 of this series can be accessed using the following link:
Part 2 of this series can be accessed using the following link:
Part 3 of this series can be accessed using the following link:
This 5 part series is the video version of the original 5 part series which can be accessed using the following links:
Scarcity Part 1 – Defining Scarcity
Scarcity Part 2 – Natural or Contrived
Scarcity Part 3 – Meat and Dairy Land Use
