Goods and Services Goods = physical objects Services = actions or activities that one person performs for another
List all the Goods and Services you can think of in our economy • GOODS • SERVICES
Factors of Production The resources that are used to make all goods and services Economists identify Four Factors of Production: Land, Labor and Capital (Physical and Human)
Land • All natural resources (materials found in nature) used to produce goods and services.
Labor • The effort a person devotes to a task for which the person is paid.
Capital • Any human-made resource used to produce other goods and services • There are two types: physical and human
Physical Capital • Human-made objects used to create other goods and services
Human Capital • Knowledge and skills a worker gains through education and experience
Chocolate Chip Cookies Partner Activity • Imagine an alien from Mars just arrives on earth and has developed a taste for Chocolate Chip Cookies • Make an extensive list of EVERYTHING needed to produce chocolate chip cookies. • Label each thing you listed as one of the four factors of production.
McDonald’s French Fries Partner Activity • Make an extensive list of EVERYTHING needed to produce McDonald’s French Fries • Label each thing you listed as one of the four factors of production.
Choose a product that you use frequently. Write a paragraph in which you explain the production of this product. Specifically identify each of the four factors of production