Producers and consumers
Every time you buy a snack, ride a bus or get a haircut, you’re part of the economy.
- A producer makes goods or provides services. A farmer, a factory, a baker and a dentist are all producers.
- A consumer buys and uses goods and services. Everyone is a consumer.
Most people are both. A baker produces bread but is a consumer when buying shoes.
Goods and services
- Goods are things that are made or grown: bread, bikes, books, apples.
- Services are work done for others: teaching, fixing cars, cutting hair, delivering packages.
The three kinds of resources
To make goods and provide services, producers need resources. Economists group them into three main kinds.
1. Natural resources
Natural resources come from nature.
- trees for wood and paper
- water
- soil for farming
- minerals like iron, copper and gold
- oil and natural gas
- fish and animals
2. Human resources
Human resources are the people who do the work, along with their skills, knowledge and effort.
- the farmer planting seeds
- the engineer designing a bridge
- the cook making dinner
- the programmer writing an app
3. Capital resources
Capital resources are things made by people that are used to make other goods and services.
- tools, like hammers and ovens
- machines, like tractors and computers
- buildings, like factories and stores
- vehicles, like delivery trucks
Some economists add a fourth resource: entrepreneurship, the ideas and risk-taking of people who start businesses.
Example: making a pizza
| Resource | Examples |
|---|---|
| Natural | wheat for flour, tomatoes, milk for cheese, water |
| Human | the farmer, the truck driver, the cook, the server |
| Capital | the pizza oven, the delivery car, the restaurant building |
Example: building a wooden table
| Resource | Examples |
|---|---|
| Natural | trees for wood |
| Human | the logger, the carpenter, the salesperson |
| Capital | saws, sanders, the workshop, the truck |
Scarcity: we can’t have everything
Resources are limited. There are only so many trees, workers and machines. But people’s wants are almost unlimited. This problem is called scarcity. Because of scarcity, producers and consumers must make choices.
- A farmer must decide what to plant on limited land.
- A family must decide how to spend limited money.
- A town must decide what to build with limited tax dollars.
Producers and consumers depend on each other
- Consumers need producers to make the things they need and want.
- Producers need consumers to buy what they make, so they can earn money and pay workers.
This creates a cycle: consumers spend money → producers earn money → producers pay workers → workers become consumers and spend money.
Resources in Canada and the United States
Both countries have rich natural resources: Canada’s forests, minerals and fresh water; the U.S.’s farmland, oil and minerals. Both also have skilled workers and modern technology, which help them produce many goods and services.
Try it yourself
- Choose a product, like a T-shirt, and list the natural, human and capital resources needed to make it.
- Interview a family member: Are they a producer of goods or services at work?
- Sort these into natural, human or capital: a tractor, a teacher, a river, a computer, a cook, coal.
- Make a poster showing the cycle between producers and consumers.
Quick recap
- Producers make goods and services; consumers buy and use them.
- Natural resources come from nature.
- Human resources are people and their skills.
- Capital resources are tools, machines and buildings.
- Scarcity means resources are limited, so we must make choices.