Question

1. apply concepts give two examples of needs and two examples of wants.
2. distinguish what is the difference between scarcity and a shortage?
3. identify why do entrepreneurs take the risk to start or expand a business?
4. categorize what are the factors of production?
5. infer if increasing physical capital increases productivity, why would a company not buy newer, faster computers for all its workers every year?

Explanation:

1. Needs are essentials, wants are desires. 2. Scarcity is inherent, shortage is temporary. 3. For profit - potential. 4. Land, labor, capital, entrepreneurship. 5. Cost - benefit analysis may not favor new computers.

Answer:

1. Needs: Food, water. Wants: Luxury car, designer clothes.
2. Scarcity is a natural state of limited resources. Shortage is a temporary lack in market.
3. To earn profit and create value.
4. Land, labor, capital, entrepreneurship.
5. High cost, low marginal benefit.