Factors of Production (Factor Resources) What is required to make goods and services in an economic system? Also known as the “means of production”

Goods and Services Goods = physical objects Services = actions or activities that one person performs for another

Review: List all the Goods and Services you can think of in our economy

Factors of Production The resources that are used to make all goods and services Economists identify Three Factors of Production: Land, Labor and Capital (Physical and Human)

Land All natural resources (materials found in nature) used to produce goods and services.

Labor The effort a person devotes to a task for which the person is paid.

Capital Any human-made resource used to produce other goods and services There are two types: physical and human

Physical Capital Human-made objects used to create other goods and services

Human Capital Knowledge and skills a worker gains through education and experience

Capital- ism An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made by private individuals and corporations This exchange is done in a “free market.” Also known as the free enterprise system.

Capital- ist A person who has capital invested in business enterprises An advocate of capitalism A very wealthy person

Chocolate Chip Cookies Partner Activity Imagine an alien from Mars just arrives on earth and has developed a taste for Chocolate Chip Cookies Make an extensive list of EVERYTHING needed to produce chocolate chip cookies. Label each thing you listed as one of the four factors of production.

Chocolate Chip Cookies Partner Activity

Choose a product that you use frequently Choose a product that you use frequently. Write a paragraph in which you explain the production of this product. Specifically identify each of the four factors of production