Standard 1Understand the fundamental

concepts relevant to the development of a market economy

SS.912.E.1.1SS.912.E.1.1Identify the factors of production and Identify the factors of production and

why they are necessary for the why they are necessary for the production of goods and services production of goods and services

3 “Classic” Factors:3 “Classic” Factors:

1)1) LandLand

2)2) LaborLabor

3)3) CapitalCapital

A More Comprehensive and A More Comprehensive and Complete Listing:Complete Listing:

1)1) Land, with varying degrees of fertilityLand, with varying degrees of fertility

2)2) Natural ResourcesNatural Resources

3)3) Machines and other human-made Machines and other human-made physical resourcesphysical resources

4)4) Animal ResourcesAnimal Resources

5)5) TechnologyTechnology

6)6) Human Resources, including skills, Human Resources, including skills, talent, and knowledgetalent, and knowledge

Why necessary?Why necessary?

Resources are the inputs to the production Resources are the inputs to the production processprocess

Without them, we couldn’t produce goods Without them, we couldn’t produce goods and services to sustain living standardsand services to sustain living standards

The Great Economics Mysteries BookThe Great Economics Mysteries BookChapter 5 Lesson 1 Why Haven’t We Run Out of Natural Chapter 5 Lesson 1 Why Haven’t We Run Out of Natural

Resources?Resources?

Economics Mystery activities.pdf

The Great Economics Mysteries BookThe Great Economics Mysteries BookChapter 5 Lesson 1 Why Haven’t We Run Out of Natural Chapter 5 Lesson 1 Why Haven’t We Run Out of Natural

Resources?Resources?

Prices act as incentives, influencing people’s Prices act as incentives, influencing people’s decisions. When prices for natural resources go up, decisions. When prices for natural resources go up, consumers face an incentive to cut back on their use consumers face an incentive to cut back on their use of those resources- as they did in the 1970s when the of those resources- as they did in the 1970s when the price of oil increased (Clue 4). At the same time, rising price of oil increased (Clue 4). At the same time, rising prices create an incentive for producers. It is an prices create an incentive for producers. It is an incentive to earn profits by increasing production incentive to earn profits by increasing production through the use of improved technology to find new through the use of improved technology to find new reserves (Clue 5). The price-related incentives are reserves (Clue 5). The price-related incentives are powerful. Profits provide natural resource producers powerful. Profits provide natural resource producers with an incentive to develop new technologies that with an incentive to develop new technologies that reduce the costs of production and keep prices low reduce the costs of production and keep prices low (Clue 8).(Clue 8).

Video: Stossel 2007 Oil SuppliesVideo: Stossel 2007 Oil Supplies

Focus: Understanding Economics in US HistoryFocus: Understanding Economics in US HistoryLesson 20 Was Free Land a Good Deal?Lesson 20 Was Free Land a Good Deal?

History visuals\lesson20_visuals.pdf

Focus: Understanding Economics in US HistoryFocus: Understanding Economics in US HistoryLesson 20 Was Free Land a Good Deal?Lesson 20 Was Free Land a Good Deal?

Economics History activities.pdf

Example of free landExample of free land

Video: Far and AwayVideo: Far and Away

The Great Economics Mysteries BookThe Great Economics Mysteries BookChapter 5 Lesson 4 The Tragedy of the CommonsChapter 5 Lesson 4 The Tragedy of the Commons

Economics Mystery activities.pdf

The Great Economics Mysteries BookThe Great Economics Mysteries BookChapter 5 Lesson 4 The Tragedy of the CommonsChapter 5 Lesson 4 The Tragedy of the Commons

From an economic perspective, the problem presented by each From an economic perspective, the problem presented by each case is one of insufficient or perverse incentives. The incentives in case is one of insufficient or perverse incentives. The incentives in play do not encourage people to protect the environment (Clue 3). play do not encourage people to protect the environment (Clue 3). Indeed, in each case, some incentives encourage people to overuse Indeed, in each case, some incentives encourage people to overuse or abuse the threatened resource- salmon, elephants, and whales.or abuse the threatened resource- salmon, elephants, and whales.The incentives would change for the better if a way could be found The incentives would change for the better if a way could be found to establish private ownership rights or something close to private to establish private ownership rights or something close to private ownership rights (Clue 4) for threatened resources. When nobody ownership rights (Clue 4) for threatened resources. When nobody owns a population of fish, for example, it is in the interest of a owns a population of fish, for example, it is in the interest of a fisherman to catch as many fish as possible. Not to do so is to fisherman to catch as many fish as possible. Not to do so is to leave fish for others to catch. In other words, fish owned by nobody- leave fish for others to catch. In other words, fish owned by nobody- like wild salmon off the American Northwest coast- have no like wild salmon off the American Northwest coast- have no protectors. If ownership rights could be established, the owners of protectors. If ownership rights could be established, the owners of the fish could use the legal system- courts and appropriate law the fish could use the legal system- courts and appropriate law enforcement officers- to protect their valuable property.enforcement officers- to protect their valuable property.

Video: History Channel farming technologyVideo: History Channel farming technology

(Longer clip, but lots of good history)(Longer clip, but lots of good history)

ENDEND