Factors of Production

Factors of Production

Natural ResourcesHuman ResourcesCapital ResourcesEntrepreneurship

Natural Resources

• Any item that is provided by NATURE that can be used to produce goods and services

– Nature: Found ON, IN or COMING into (sun) earth.

Dirt

Local Farming

The Wheat Trail

Verndale’s Grist Mill

The Iron Range

Economic Impact

The Port of Duluth

Legacy of the Twin Ports and the Iron Range on US and World History

Steel Builds America

Economy built on Steel

Logging

Blandin Paper Mill

Logging Built America

How do we make it go?

• Natural Resources

Power

Human Resources

• Any HUMAN effort exerted during production• Physical Labor• Intellectual Labor

Physical Labor

Intellectual Labor

Capital Resources

• Manufactured materials used to create products

• CAPTIAL GOODS: – Buildings, structures, machinery and tools(Mall, factories, dams, computer, hammer)

Capital goods are MANUFACTURED resources in making FINISHED PRODUCTS

Capital Resources

Capital Resources

Capital Resources

Entrepreneurship

Organizing ability (yours and others)

Risk taking venturesStarting a new businessIntroducing a new product

Willing to risk economic FAILURE in return for finical gain.

Entrepreneurship

Bill GatesMicrosoft2013 Net Worth$78.5 BILLION2nd richest man on EARTH

IDEA…

Entrepreneurship

IBM COMPUTERS

What can I make so people can use it?

Really Bill…the answer is NO NO NO

OK…So don’t BUY it.Just give me a cut.

IBM “Fat Cat”Gates

OK Mr. Bad Idea, We will put this WINDOWS in. I risk nothing…

A Mouse…how stupid. Why not call

it a gerbil.

Nothing But an IDEA and Smarts

Factors of Production

• Natural Resources• Human Resources• Capital Resources• Entrepreneurship

3 Basic Economic Questions

•What to produce?•How to produce it?•For whom to produce?

What to Produce

Think Big Picture– Society can NEVER meet all the wants and needs– Society’s economic system must determine the

urgency of the wants and needs– A decision MUST be made on what to produce

What to Produce

How to Produce

• How a society chooses to allocate its resources

For Whom to Produce

• Society must determine how to DISTRIBUTE the goods and services it produces

• Whom Will Consume the goods and services

Who will attend? Any Transfer Students? How will taxpayers pay?

Taco Smoothies

Productivity• The level of output that results from

a given level of input

*Make the most using the least*Work Smarter, not just work Harder

Productivity• Efficiency – The use of the smallest amount of

resources to produce the greatest amount of output

• Division of Labor – Assigning a small number or single task to each individual worker.

• Specialization – The focus on a specific task as a result of division of labor

Productivity

• Henry Ford and Taylorism

Taylorism on ABC

Unit One Review