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Factors of Production

Factors of Production. The “Things” … that Make Things. Learning Goals. Students will understand the importance of natural resources and raw materials in the production process Students will understand the role of labour and capital in production

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Factors of Production

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  1. Factors of Production The “Things” … that Make Things

  2. Learning Goals • Students will understand the importance of natural resources and raw materials in the production process • Students will understand the role of labour and capital in production • Students will understand the role of Management in business

  3. Natural Resources • Also known as the “primary industries” • Everything in the world is made up of six types of natural resources… Fuel/Energy Agriculture Logging/Forestry Mining Fishing/Trapping Water • Often converted into the raw materials that make most products • Ex. Mining = Iron Ore = Steel = Car parts, electronics, etc…

  4. Raw Materials • Goods used in the manufacture of other goods • Only with fishing and some agriculture do consumers buy Natural Resources • All other resources are turned into raw materials (Ex. Wheat is a natural resource … that makes flour…which is a raw material for bread) • Converting natural resources to raw material is called processing

  5. Labour • The physical and mental work needed to produce goods • Often an expensive part of production • Costs are reduced with outsourcing • Outsourcing = paying another company to do something for you (ex. GM does not make tires but pays another company to make tires for them) • Note….International trade reduces the cost of outsourcing even further

  6. Capital • The money invested in the business • Can be liquid capital (cash, investments, receivables) which can be easily converted to cash • …or Non-liquid capital (equipment, buildings, etc. )

  7. Information • Information is a product to be sold (ex. Consultants offer advice) • Information is also a tool to be used (ex. Accountant, Lawyer, etc.) • Either way…more information = better production

  8. Management • The people who make decisions on the other factors of production • What capital, information and resources are needed? Where to purchase them from? Etc… • Management oversees all elements of production

  9. Application Section (Step 1) • With a partner select two products you brought with you to class today • DO NOT select products that are too simple (ex. Apple) or too complicated (ex. Cell Phone) • Write these products in the first row beneath Product#1 and Product #2 of your worksheet (next slide) • Brainstorm the six factors of production (as specific as you can) that influenced the making of these two products • Be as complete as you reasonably can

  10. Table

  11. Application Section (Part 2) • With your partner, join another group of two and share ideas • Review/Discuss your product and what you described as the six factors of production for that item • Ask your “new” group members if they know of any factors of production you may have missed • Write these points in the “And???” columns of your worksheet to complete your sheet

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