1. Introduction to Economics Factors of Production

2. What is Economics? REMEMBER… Economics is the study of how people try satisfy their own needs/wants through the careful use of scarce resources.

3. Scarcity of Resources Condition that results from not having enough resources to produce all the things you would like to have.

4. Factors of Production Resources required to produce things we would like to have. Production refers to the process of creating goods/services.

5. Factors of Production There are 4 factors of production: 1. Land 2. Capital 3. Labor 4. Entrepreneurs

6. Factors of Production LAND: 1. Natural resources 2. Fertile fields, forests, mineral deposits 3. Livestock 4. Sunshine 5. Climate LIMITED (fixed amount)

7. Factors of Production CAPITAL: 1. Tools, equipment, machinery, factories 2. Capital goods 1. Large purchases 3. Financial capital 1. Money used to purchase capital

8. Factors of Production LABOR: 1. People (workers) 2. Abilities 3. Effort 4. Skills VARIES (amounts vary)

9. Factors of Production ENTREPRENEURS: 1. Risk-takers 2. Driving force of an economy 3. Innovators who help advance the economy Entrepreneurs are the ones who bring new products to the economy or do something new with existing resources.

10. Factors of Production 1. What three countries have the highest percentage of adults starting new businesses? 2. What three countries have the lowest percentage of adults starting new businesses? HIGHEST: Nigeria/Zambia, Ecuador, Malawi LOWEST: Colombia, Peru, Angola

11. Exit Slip 1. Describe 3 things you learned today. 2. List 2 things that interest you. 3. Name 1 thing that needs more clarification. 4. Why are entrepreneurs considered the “driving force” of the economy? 5. What would happen if one of the factors of production was missing?