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

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

GOODS SERVICES

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)

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

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

CapitalAny human-made resource used to produce other goods and services

There are two types: physical and human

Physical CapitalHuman-made objects used to create other goods and services

Human CapitalKnowledge 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 corporationsThis exchange is done in a “free market.” Also known as the free enterprise system.

Capital- istA person who has capital invested in business enterprises

An advocate of capitalism

A very wealthy person

Chocolate Chip Cookies Partner ActivityImagine 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. Write a paragraph in which you explain the production of this product. Specifically identify each of the four factors of production