Today for economics, we're going to be talking about the factors of production. So let's figure out what the factors of production are now.
Before we get started make sure you take out your guided notes, you can find them below the guided notes will go along with the article and I'll help you remember all the important concepts. It'll be important for you to do this, so that way when you have your test or quiz you know all the information and you don't have to go back and re-read this.
Now the factors of production are used to produce things in our society. The factors of production are land, labor, capital and entrepreneurship. These are the things that get used to produce stuff. Now it seems very simple and that's because they kind of are.
Just think about it, it's logic you have to have land, to be able to produce whatever you want to make. You have to have labor to have people that are willing to spend their time and energy to produce your product, you have to have capital.
Capital meaning money and the tools to be able to build whatever you are deciding to produce.
Entrepreneurship that's the idea, you have to have an idea for your company, the idea to create the product , the idea of the product.
When you have these four things, you have the factors of production. Now the factors of production get used in a bunch of different ways. It depends on what country you live in, it depends on the business hours the services that are going to be provided all. These things have to go into it but the factors of production hopefully aren't that complicated.
Now we're going to do some practice problems and see if you can identify which of the factors of production are being used .
Which of the four factors of production? Do you think are being used here, you have land, capital, labor or entrepreneurship. Take your time. Alright if any more time positive but if you think you got it and if you said land you are correct. Yes all resources would be part of land, so that would include water and coal and iron and all these different things that we take from the world alright.
Next practice problem. Let's see if you can get this one, so we've bunch of pictures up again. If you guessed entrepreneurship you are correct this is showing the ideas that come to create a product. The idea that sparked the innovation.
Let's go to another one. We have the picture up on the board right now. If you said labor you are correct it is labor that's right labor , these are the people who are producing it. they're not the people that came up with the original idea, but they're the people working to create this product.
Let's go into some word problems next . So run to the word problems now and remember all the answers will be land labor capital or entrepreneurship those are our four factors of production. Make sure you remember those because those will be important.
Our first problem is up, you have an idea to start a business and you decide to take a risk and do it. Which of the four factors of production is? It take your time. Think it through. If you said land you are absolutely incorrect. I apologize it is entrepreneurship entrepreneurship there you are coming up with the idea for the business and you're gonna take the risk to do it.
Let's say you do start your business and now you have to go and purchase office supplies to be able to run your day-to-day operations. Which of the four factors of production is being shown? If you need to the answer is capital that's right. It is capital you have to go out and purchase things for the day-to-day operations even those office supplies are capital goods.
If you remember from the economic question article we talked about capital goods if you need a refresher. You can click the card on the top right and check that out. We'll do one more word problem and it is this your prompt is water, iron, coal.
Which of the four factors of production was just shown?
If you said land you are absolutely correct hopefully. Now the four factors of production are making sense, they're not too difficult but they're really important for us to understand because this is how we produce things businesses have to figure out. What they're going to do with the four factors of production, what resources are they going to use, how will they use them eventually. We'll be getting into PPF charts and looking at how do we use resources efficiently.
What happens when we use them inefficiently, so it'll be important to have this foundation before we get into the morecomplicated things.