Satisfaction of Human Wants - Business Studies Form 1 Notes

• Introduction
• Characteristics of Human Wants
• Types of Human Wants
• Goods and Services
  • Differences Between Goods and Services
• Economic Resources
  • Characteristics of Economic Resources
  • Classification of Economic Resources
• Scarcity, Choice and Opportunity Cost

Introduction

• Human wants are the desires that human wants strive to achieve by using goods and services. Examples of human wants include food, clothes, phones, cars, education etc.
• Satisfaction of human wants is the process of acquiring and using resources.

Characteristics of Human Wants

1. They are insatiable
   • Human wants cannot be fully satisfied. This is because;
   • They are endless e.g. no matter how many clothes one has, he/she needs more
   • They are unlimited in numbers i.e. they are many hence the satisfaction raises the need for satisfying other needs. E.g. once one has enough food, he/she will think of buying clothes.
2. They vary in intensity and urgency
   • The amount of goods and services required varies from one person to another and also from time to time. This variation may also be influenced by gender and age.
3. They are competitive
   • Human wants compete for attention to the extent that each one of them yearns to be satisfied first. For example as human beings struggled to get food, other needs such clothes, education, medical care etc. will emerge.
4. They are recurrent(repetitive)
   • Satisfaction of human wants does not last forever. A particular want will want to be satisfied over and over again. This explains why human wants eat at regular intervals.
5. Some human wants are universal
   • Some human wants are common to all human beings though in varying proportions. For example, all human beings require food, shelter, clothing, security, entertainment etc.
6. They are habitual
   • Some human wants tend to create a habit among human beings of being desired every now and then. For example some people have developed of only using a certain type or brand of toothpaste
7. They require resources
   • All human wants require resources for them to be satisfied. For example, for one to acquire resources such as teachers, money, books, pens desks etc. are required.
8. They are complimentary
   • Some human wants are not used in isolation, they have to be combined with others. For example, a car requires fuel to operate

Types of Human Wants

Human wants can be classified into basic and secondary wants. These are discussed below:

1. Basic wants
   • These are the requirements that one cannot do without because they are necessary in life.
   • They ate also called primary wants.
   • They include food, shelter and clothing.
   • Basic wants must be satisfied before other wants (secondary) are satisfied.
   
   Characteristics of basic wants
   
   • One cannot do without them
   • They are felt needs
   • They cannot be postponed
   • They are satisfied before secondary wants
2. Secondary wants
   • These are requirements that one can without but are needed to make life more comfortable.
   • Secondary wants can be categorised into comforts and luxuries.
   • Comforts: these are wants which improve one’s living standards beyond the level of mere survival. They include things like furniture, medical care, security and education
   • Luxuries: these are wants that provide excessive comfort. Thy include things like gold watches, very expensive cars, forty bedroomed house, some foods like biscuits and sweets etc.
     
     NOTE: sometimes secondary wants may be classified as basic wants. E.g. medical care to a sick person is a basic want.

Ways in which Commerce Satisfies Human Wants

1. Facilitates exchange which enables people to acquire what they don’t have
2. Facilitates storage of goods until the time they are needed
3. Facilitates movement of goods to where they are needed
4. Facilitates the conversion of goods to the right form

Goods and Services

 Goods and services also known as commodities, have distinct features that help in differentiating between them. These features are discussed below

1. Goods
   • Goods are tangible physical commodities that are used to satisfy human wants.
   
   Characteristics of goods
   
   • They are tangible
     - Goods can be touched and felt. This is because they are material in nature.
   • They can be stored
     - Goods can be stored for future use. Some goods can stay longer than others without getting spoilt. Goods which stay for long without getting spoilt are known as durable goods e.g. furniture, buildings etc. whereas goods which go bad easily unless stored under special conditions are known as perishable goods e.g. onions, vegetables, bread etc.
   • Their quality can be standardized
     - The quality of goods can be made uniform through the use of certain machines.
     - This enables the production of goods of specific sizes and qualities.
     - Goods can also be standardized through quality control. Quality control is the process of ensuring goods produced meet set standards
   • They can change possession
     - Goods can change ownership through trade. They can also change possession through donations.
   • They can be seen
     - Most goods other than air can be seen.
   • Their quality can change over time
     - Some goods loose value over time. These may include goods like furniture, cars, buildings etc. On the other hand some goods such as land increase in value over time.
2. Services
   - Services are actions. They are intangible and invisible. Examples of services include teaching, transportation, banking etc.
   
   Characteristics of services
   • They are intangible
     - Services cannot be touched and felt since they are immaterial. However the effects of services can be felt e.g. the effect of entertainment is happiness.
   • They cannot be stored
     - Services are extremely perishable. They are consumed as they are provided.
   • Their quality cannot be standardised
     - Quality of services cannot be standardised because they vary over time from one service provider to another. E.g. the quality of hairdressing varies from one hairdresser to another
   • They cannot be separated from the provider
     - Services are provided directly from the provider to the consumer, therefore they cannot change possession. For instance, a teacher has to be there for teaching to take place.
   • They cannot be seen
     - Services are actions which not in material form, therefore, they cannot be seen

Differences Between Goods and Services

Economic Resources

• Resource: resource refers to the means of achieving a result or of doing something.
• Economic resources: these are resources which are scarce and have money value. Human effort or a price is required to obtain them. Examples of economic resources include food, books, minerals etc.
  
  NOTE: some resources are plenty in supply and have no money value. Such resources are called free goods because they are provided freely as gifts of nature. Examples include air, rain and sunshine.
• Free goods may be viewed as economic resources depending on the activities carried on them. E.g. fishing and transport makes some water bodies economic activities

Characteristics of Economic Resources

1. They are scarce in supply
   - Economic resources are less in supply than what is required by human beings.
   - This is why human beings needed to work in order to acquire these resources.
2. They have money value
   - The value of economic resources can be expressed in terms of money. The money value is their exchange price. This money value facilitates change in ownership. E.g. the price of a packet of milk is Ksh 60. This is its monetary value
3. They are unevenly distributed
   - Economic resources are available in varying quantities at different places. Some places may have more of a particular resource than others. E.g. oil is not available everywhere
4. They have utility
   - Utility refers to the usefulness or ability of a commodity to satisfy human wants.
   - All economic resources are capable of satisfying human wants in one way or another.
5. They have alternative uses
   - Economic resources may be put to different uses. For example a piece of land can be used for farming, construction or the owner can even rent it out. People therefore have to find useful uses for the resources at their possession.
6. They can change ownership
   - Due to the fact that economic resources have money value, change in ownership from one person to another can be effected through sale. Ownership can also change as a donation or as a gift.
7. They can be combined
   - Economic resources can be combined in other quantities to produce other goods and services. For example wood, nails glue and varnish are combined in certain quantities to make a table
8. They can be complimentary
   - Different economic resources can be consumed or used together. For example bread may be used with blueband.

Classification of Economic Resources

Economic resources can be classified into five. Namely:

• Natural resources
• Man-made (artificial) resources
• Human resources
• Renewable resources
• Non-renewable resources

1. Natural resources (gifts of nature)
   - These are resources which are provided by nature. They include forests, rivers, mountains, lakes, climate and land 
   - Human beings work on natural resources to create goods and services.
   - Human beings must use natural resources profitably in order to gain from them.
   - For example sunshine is beneficial economically when it is used to provide solar energy.
   - For natural resources to contribute to economic development, human beings must,
   • Know that they exist
   • Use their knowhow to extract the resource from their natural setting
   • Use the extracted resources to produce goods and services that can satisfy human wants
   
   - Natural resources influences peoples’ culture and their attitude towards work.
   E.g. people who live in cold places may use the resources available to protect themselves from cold such as the use of fur
   
   Economic Importance of Natural Resources
   • They create employment during extraction and exploitation
   • They provide raw material for industries
   • They bring foreign exchange to the country when exported
   • They are a source of energy
   • Provides settlement for both human beings and animals
   • They are a source of food
   
   Reasons why the government controls the exploitation of natural resources
   
   • To prevent the misuse of resources
   • To prevent environmental degradation
   • To conserve the resources
   • To control production activities which require natural resources
   • To generate revenue from the exploitation of resources
   • Promote tourism
2. Man-made resources (artificial resources)
   - These are resources which are created by human beings to be used in satisfying their wants. They are made from natural resources.
   - Human beings use natural resources to produce goods and services that are consumed directly (consumer goods) e.g. food and clothes or to produce goods and services that can be used to produce other goods (producer or capital goods) e.g. machines
3. Human resources
   - They refer to human beings when rendering services in production of goods and services.
   - An individual becomes an economic resource by using his/her intelligence and physical strength in the production of goods and services.
   - Examples of human resources are teachers, doctors, lawyers, engineers etc.
4. Renewable resources
   - These are resources whose supply can be restored. They include wood, fuel, hydroelectric power, solar energy, wind power and soda ash.
5. Non-renewable resources
   - These are resources whose supply cannot be restored after use. Using this resources results in their exhaustion e.g. gold. However it should be noted that with technology, certain non-renewable resources can be renewed. E.g. petroleum oil can be replaced with gasohol once exhausted.
   
   Examples of Renewable and Non-Renewable Resources
   
   

   Renewable resources	Non-renewable resources
   Wood	Coal
   Natural rubber	Building stone
   Wool	Gravel
   Silk	Iron
   Leather	Aluminium
   Solar energy	Gold
   Hydro-electric power	Lead
   Wind power	Natural gas
   Soda ash
   Vehicle

Scarcity, Choice and Opportunity Cost

• Scarcity: refers to a limitation in supply of economic resources in relation to the unlimited wants
• Choice: refers to selection of the human wants to be satisfied using the scarce resources
• Opportunity cost: this is the value or alternative foregone in order to satisfy an equally competing want
• Resources are scarce, as a result, human beings must make a choice on what wants to satisfy using the available resources since all their wants cannot be satisfied using the resources that are available. For example a student with Ksh 30 to buy either a pen or a loaf of bread will be forced to buy one of the two products and undergo the other. If he/she decides to buy a pen, then he/she will have to sacrifice a loaf of bread. This sacrifice is called opportunity cost.