Factors of Production

1. Factors of Production -Capital or Capital Goods---the money or tools needed to produce goods/services -Land / Resources– the natural resources needed to produce goods/services

2. Factors of Production -Labor– the work required to produce goods/services -Management—the decision making process that is involved in producing goods/services

3. Traditional Economy Advantages Disadvantages - - -economy where people supply most of the goods and services they use -many things are done by tradition -usually in places of little modern technology

4. Command Economy Advantages Disadvantages - - -economy where the government controls the factors of production -Government makes all decisions

5. Market Economy Advantages Disadvantages - - -individuals make all economic decisions according to supply and demand -laissez-faire economics -also called free market, free enterprise, or capitalism -competition and supply and demand determine the economy-----the “invisible hand”

6. Mixed Economy Advantages Disadvantages - - -a mixing together of market and command systems -individuals have economic freedoms -government retains some control for benefit of citizens