1 / 13

Three Basic Questions and the Factors of Production

Three Basic Questions and the Factors of Production. Econ 1.2 Econ 1.3. How does “society” decide what to make?. When determining what to do with its economy “society” asks three basic questions to make this determination. Three Basic Questions. WHAT to produce? HOW to produce?

cindy
Download Presentation

Three Basic Questions and the Factors of Production

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Three Basic Questions and the Factors of Production Econ 1.2 Econ 1.3

  2. How does “society” decide what to make? • When determining what to do with its economy “society” asks three basic questions to make this determination.

  3. Three Basic Questions • WHAT to produce? • HOW to produce? • FOR WHOM to produce?

  4. WHAT to produce? • A society cannot have everything it wants so it must determine what to produce.

  5. HOW to produce? • Should a factory use a lot of machinery and few people, or should it use a lot of people and few machinery?

  6. FOR WHOM to produce? • Society must decide how the goods it produces are allocated.

  7. Factors of Production • The reason that people cannot satisfy all their needs is the scarcity of productive resources • Factors of production are the resources required to produce the things we would like to have

  8. Factors of Production • Land • Capital • Labor • Entrepreneurs

  9. LAND Natural resources; “gifts of nature” not created by humans Ex.-forests, minerals, livestock, sunshine, rain Factors of Production

  10. Factors of Production • CAPITAL • Means by which something is produced • Ex.-money, machinery, factories, trucks, tools, equipment, machinery

  11. Factors of Production • LABOR • The workers who apply their efforts, abilities and skills to production • Ex.-factory worker, farmer,

  12. Factors of Production • ENTREPRENEUR • Risktaker who combines all factors of production into new products • Ex.-Russell Simmons, Bill Gates, Ray Kroc

  13. Production • Production is the creating of goods and services • It is the result of land, capital, labor and entrepreneurs

More Related