What is Economics? Scarcity and Factors of Production Chapter Essential Question How can we make the best economic choices? 9/12, 9/13 9/14, 9/15 9/19.

What is Economics?Scarcity and Factors of Production

Chapter Essential Question• How can we make the best economic

choices?

9/12, 9/13

9/14, 9/15

9/19

Chapter Test and Assessment Activity:

9/20-9/22

What is Economics?Scarcity and Factors of Production1.

Objectives1. Describe what entrepreneurs do.

2. Define the three factors of production and the differences between physical and human capital.

3. Explain how scarcity affects the factors of production.

What is Economics?Scarcity and Factors of Production2.

Key Terms

• entrepreneur: a person who decides how to combine resources to create goods and services

• factors of production: the resources that are used to make goods and services

• land: all natural resources used to produce goods and services

• labor: the effort people devote to tasks for which they are paid

What is Economics?Scarcity and Factors of Production2.

Key Terms

• capital: any human-made resource that is used to produce other goods and services

• physical capital: the human-made objects used to create other goods and services

• human capital: the knowledge and skills a worker gains through education and experience

What is Economics?Scarcity and Factors of Production

• Entrepreneurs play a key role in turning scarce resources into goods and services.

• Entrepreneurs are

willing to take risks in order to make a profit. They:– Develop original ideas– Start businesses– Create new industries– Fuel economic growth

• Some famous entrepreneurs: Bill Gates, Steve Jobs, Russell Simmons, Sean Combs, Mark Zuckerberg

• Anyone who starts a business, including local stores on our blocks, is an entrepreneur!

3. Entrepreneurs

What is Economics?Scarcity and Factors of Production3. Entrepreneurs

• An entrepreneur’s first task is to assemble the factors of production: land, labor, and capital.

What is Economics?Scarcity and Factors of Production

• Land refers to all natural resources used to produce goods and services.

• These resources include:– Fertile land for

farming– Oil– Coal– Metals/Minerals– Water– Forests – Fish/Livestock

4.

Factors of Production: Land

What is Economics?Scarcity and Factors of Production

• Labor is the work people do for pay/wages.

• Labor includes:

– The medical care provided by a doctor

– The classroom instruction provided by a teacher

– The tightening of a bolt by an assembly-line worker

– The creation of a painting by an artist

– The repair of a television by a technician

• Most skilled labor is in service-oriented jobs, which is why EDUCATION IS KEY

4.

Factors of Production: Labor

What is Economics?Scarcity and Factors of Production

• Capital refers to any human-made resource that is used to produce other goods and services.

• An economy requires both physical and human capital to produce goods and services.– Physical capital includes:

• Buildings• Equipment (including Tech – computers,

etc.)• Tools

– Human capital includes:• A college education• Training – technology or job-specific skills• Job experience

4.

Factors of Production: Capital

What is Economics?Scarcity and Factors of Production

• Capital is a key factor of production because people and companies can use it to save a great deal of time and money.

• The benefits of capital include:– Increased efficiency– Increased knowledge– Better time management– Increased productivity

• The difference of capital in countries – both physical and human – is a key factor why there are developed (rich) and developing (poor) countries

4. Benefits of Capital