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

Landincludes all natural resources

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