Define business, scarcity, opportunity cost, and entrepreneurship. Explain four characteristics of human wants.

Here are the answers to the questions:

1.a) Define the following terms:

i. Business: A business is an organization or economic system where goods and services are exchanged for one another or for money, typically with the aim of making a profit.
ii. Scarcity: Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources.
iii. Opportunity cost: Opportunity cost is the value of the next best alternative that must be forgone when making a choice.
iv. Entrepreneurship: Entrepreneurship is the activity of setting up a business or businesses, taking on financial risks in the hope of profit.

b) Explain four characteristics of human wants.

1. Unlimited: Human wants are endless and can never be fully satisfied. As one want is satisfied, another emerges, leading to a continuous cycle of desires.
2. Recurrent: Many human wants are recurring, meaning they need to be satisfied repeatedly over time. For example, the want for food and water arises daily.
3. Competitive: Wants are competitive because resources are limited. Individuals must choose which wants to satisfy first, as satisfying one want often means sacrificing another.
4. Complementary: Some wants are complementary, meaning the satisfaction of one want necessitates the satisfaction of another. For instance, buying a car creates a want for fuel and maintenance.

c) Describe four factors of production and state their rewards.

1. Land: This refers to all natural resources used in production, including the physical space, minerals, water, forests, and fertile soil.
   • Reward: Rent
2. Labor: This is the human effort, both physical and mental, contributed to the production of goods and services.
   • Reward: Wages or Salaries
3. Capital: This includes all man-made resources used in production, such as machinery, tools, buildings, infrastructure, and equipment.
   • Reward: Interest
4. Entrepreneurship (or Enterprise): This is the ability to organize and combine the other factors of production (land, labor, and capital), take risks, and innovate to create new goods or services.
   • Reward: Profit