UNIT ONE ~ CHAPTER ONE

LESSON THREE

~ THE FACTORS OF PRODUCTION ~

LESSON THREE

~ THE FACTORS OF PRODUCTION ~ • Four

factors of production

present to produce

goods

must be and services

INTRODUCTION TO ECONOMICS

~THE FACTORS OF PRODUCTION~

• Four factors of production must be present to

produce goods and services:

• LAND • LABOR • CAPITAL • ENTREPRENEURS

INTRODUCTION TO ECONOMICS

~THE FACTORS OF PRODUCTION~

• FACTORS OF PRODUCTION: resources required to produce the things we would like to have (land, labor, capital, and entrepreneurs) • All four factors are required to produce resources • Are you capable of identifying all factors?

INTRODUCTION TO ECONOMICS

~THE FACTORS OF PRODUCTION~

LAND

• In economics, land refers to “gifts of nature” • Examples: desert, fields, forests, mineral deposits, livestock, sunshine, feet, and climate • There is a finite amount of land available; thus, economists tend to think of it as being fixed, or in limited supply

INTRODUCTION TO ECONOMICS

~THE FOUR FACTORS OF PRODUCTION~

LABOR

• Labor refers to people with all their efforts, abilities, and skills • This category includes all people except “entrepreneurs” • Factors such as birthrates, immigration, famine, war, and disease have had dramatic impacts on the quantity and quality of labor

INTRODUCTION TO ECONOMICS

~THE FOUR FACTORS OF PRODUCTION~

CAPITAL

• AKA “CAPITAL GOODS” – the tools, equipment, machinery, and factories used in the production of goods and services • Capital Goods are unique because they result from production • Examples include: computers, bulldozers, trucks, machinery, and printers

INTRODUCTION TO ECONOMICS

~THE FOUR FACTORS OF PRODUCTION~

ENTREPRENEURS

• Entrepreneurs are singled out because they are the innovators responsible for much of the change in the economy • ENTREPRENEUR: a risk taker in search of profits who does something new with existing resources • ENTS are considered ‘drivers of the economy’ because they are the people who start new businesses or bring new products to market

INTRODUCTION TO ECONOMICS

~THE FOUR FACTORS OF PRODUCTION~

• Everything we make requires the FOUR FACTORS OF PRODUCTION • Everything can be categorized into the FOUR FACTORS OF PRODUCTION • When one factor of production is altered or affected, the other three also affected

INTRODUCTION TO ECONOMICS

~THE FOUR FACTORS OF PRODUCTION~

HOW WELL DO YOU KNOW THE FOUR FACTORS OF PRODUCTION?

IN GROUPS OF TWO, FIND TWO EXAMPLES OF EACH OF THE FOUR FACTORS OF PRODUCTION. LABEL THEM AND PRINT THEM OUT.

BE PREPARED TO SHARE WITH THE CLASS!