ECONOMICS and Factors of Production

What is Economics? Economics is the study of the production, distribution, and consumption of goods and services- to meet people’s needs and wants.

Need Want

These resources are called FACTORS OF PRODUCTION The more goods and services a country produces, the better its economy. To produce any goods or services resources are needed. These resources are called FACTORS OF PRODUCTION

THE FOUR FACTORS OF PRODUCTION Natural Resources Capital Resources Human Capital ENTREPRENUER

NATURAL RESOURCES Natural resources are defined as everything in the universe that is not created by human beings. Examples: Air, sunlight, wood, and water.

HUMAN CAPITAL Human capital refers to the skills of workers (labor), such as education, training, and health. Investments in human capital increase productivity. Example: A teacher’s teaching certificate, a Doctor’s license to practice, and Yao Ming’s athletic training.

1. What’s the difference between a human resource and human capital?

Capital RESOURCES Capital resources are goods produced to make other goods and services, such as tools, buildings, machinery. The higher the capital investment the higher the productivity. Example: An electric saw, helps a carpenter make a table faster.

ENTREPRENEUR Someone who combines natural resources, capital resources, and human capital, to create a new business.

Why Factors of Production? Factors of Production describe and impact the economy of a nation; the GDP- our next lesson...

The illustration below shows the factors of production that might be used in a small business. 2. Identify the Factors of Production

Lets REVIEW!

REVIEW 3) Which is an example of investing in human capital? A. cash B. factories C. highways D. A degree in business management

REVIEW 4. Which is an example of investing in capital resources by a company ? A. installing the latest Apple computers B. keeping old delivery trucks C. training more people. D. fixing outdated machinery

REVIEW 5. Which is an example of a natural resource? A. wooden bench B. highways C. education D. corn

REVIEW 6.) A country that does not invest in human capital will have problems because A. there will be no money to pay its workers. B. workers will learn on their own the skills they need. C. businesses will not pay the taxes to pay for good schools. D. workers who are not educated, skilled, and healthy are less productive.

7. Which of the following is NOT a factor of production. A 7. Which of the following is NOT a factor of production? A. Entrepreneur B. Natural Resources C. Market Resources D. Capital Resources

Fill in the Blank 8.) ___________ is the study of the production, distribution, and ________ of goods and services. A) Factors of production, consumption. B) Economics, consumption. C) Capital investments, consumption D) Economics, destruction

True of False 10) A pencil is an example of a capital resource. Mark A for True and B for False 9) Water, honey, bread are all natural resources. 10) A pencil is an example of a capital resource. 11) A teacher is an example of human capital. 12) All four factors of production are needed to start a business.