Factors of Production

​Starting with some review

​Some text here about the topic of discussion.

Multiple Choice

When I make a choice, the best thing I give up for that choice is my

• Cost / Benefit

• Incewntive

• Opportunity Cost

• Choice

Multiple Choice

Something that encourages you to act a certain way is

• Scarcity

• Thinking at the margin

• Incentive

• Opportunity Cost

Multiple Choice

Economics is the study of

• Choices

• Money

• Politics

• Graphs

Multiple Choice

Scarcity is

• Shortage

• Not enough to satisfy demand

• Opportunity Cost

• Economics

​Thinking at the Margin

Deciding a little more or a little less using cost-benefit analysis

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Why does it matter

• Better understand yourself

• Better understand the world

• What are some examples of thinking at the margin?

  • Hitting snooze one more time

  • 5 more minutes of . . . .

  • One more slice of pizza

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Another experiement

• A few students who 'like' marshmallows

• Eat it slowly

• Rate utility (satisfaction) from eating the marshmallow on scale of 1 to 10, 10 being the highest

• Repeat until a 2 or below (do NOT make yourself sick!)

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​Diminishing Marginal Utility

• Diminishing = less

• Marginal = one more

• Utility = satisfaction / happiness

• This is the idea that each additional unit will not keep making you happier

• Think about favorite snack

  • First is great

  • Maybe even second and third

  • Fourth starts to make you sick

  • Fifth is awful

Subject | Subject

Cost Benefit Analysis

• Cost: what you give up / lose

• Benefit: what you gain

• Compare costs to benefits

  • Often a T chart with costs on one side and benefits on the other

• Do this all the time

• Business and government, do it more formally

  • Remember costs are NOT just $

  • Think Ford Pinto and put $ on human life over fixing each car for $11

• Paradox of “value in use” versus “value in exchange

  • Why are diamonds more expensive than water

Subject | Subject

Factors of Production

Land + Labor + Capital + Entreperneur = Goods and Services 

Multiple Choice

Which is a resource you can just walk outside and find

• Land

• Labor

• Capital

• Entrepreneur

Land - Natural Resources

• If not used they go to waste

• Broken into different categories 
  

• Renewable: Keeps coming back like crops
  

• Perpetual: Continuious like waves and solar

• Non-Renewable: Once used not going to come back

Multiple Choice

Which resource is concerned with organizing people and materials

• Land

• Labor

• Capital

• Entrepreneur

Entreperneur 

• In Economics some management falls in this category

• They are not always considered a factor, but are important since they organize and make sure resources are used efficiently 

• People who start and run their own business - can buy and run a franchise 

• Often called risky, but really just a different type of risk

• Increase productivity either by creating more with the same inputs or using less inputs to create the same amount

• Productivity = Total Output / Total Input

Open Ended

Who are some famous entrepreneurs and what are they known for?

Multiple Choice

Which factor deals with the people?

• Land

• Labor

• Capital

• Entrepreneur

Labor

• We do want high quality

• For Economy to grow need more people either birth or immigration 

Multiple Choice

Which deals with man-made resources that combine other resources

• Land

• Labor

• Capital

• Entrepreneur

Capital

• Money is not a true resource

• This is all the tools, buildings, and 'other' that we use to create

I, Pencil

• Essay printed in 1958 often used to explain how simple items are actually very complicated 

• Referenced often in Economics

• Did you realize how complicated and conected all of our capital really is?