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4 Types of Resources
3 Economic Questions
Reference Chapter 1.4
in your text for additional information
Resources = Factors of Production
Economists classify RESOURCES in 4 categories
1. Land
2. Labor
3. Capital
4. Entrepreneurship
LABOR
Capital= produced goods that can be used for further
production• Farm machinery, industrial tools, factories
• Also, commonly, investment money
Entrepreneurship
• The special talent some people have for searching out and developing new ideas
• The special talent for developing new products and new ways of doing things.
But how is an entrepreneur different from an inventor?
Which category of resources identifies these?
• Frida’s work as a secretary• Iron ore• Crop-duster airplane• Computer used to write a book• Comedian telling jokes on tv• Singer in an out-door concert• Teacher• Someone inventing and marketing a new good• Crude Oil• Deep sea oil platform
People need resources so they pay for them.
We can describe that payment by using money.
Monetary payments to Resources:
Monetary payments to Resources:
1. Land Rent
2. Labor Wages
3. Capital Interest
4. Entrepreneurship Profit
Price = the sum of the monetary payments to resources
3 questions every society 3 questions every society must answermust answer
• What goods shall be produced?
• How will the goods be produced?
• For whom will the goods be produced?
How a society answers those questions defines its economic system.
___________• “Market Economy”• Capitalism• Characteristics:
• “Command Economy”• Communism• Characteristics
Free Enterprise Socialism
Private Ownership of Resources
Government plays a small role
No central economic plan
Variable Income Distribution
Market supply and demand sets prices
Government Ownership of Resources
Government Controls the Economy
Government creates a central plan
Government may redistribute income
May use price controls to regulate market
X
___________ X
MIXED ECONOMYMIXED ECONOMY
Ownership of resources; private property?Ownership of resources; private property?
Governments Role in the Economy?Governments Role in the Economy?
Intervention in the Market; the role of price?Intervention in the Market; the role of price?
Free Enterprise Socialism
Homework: Create a poster no larger than 8x11
• For the country you’ve selected, please research the following:– Where is it?– What are the natural resources?– What is its economic system?
– What is produced?– How is it produced?– For whom is it produced?
• What is government’s role in the economy?• Does it have a “free market”?• Is there private property?• Role of exports and imports?
– GDP– Per capita income
Hint: User CIA World Factbook
