Oh the Production Possibilities Factors of Production Land

Oh the Production Possibilities

Factors of Production Land: Naturally occurring resources whose supply is fixed. Ex: Coal, Gold, Physical Space, Oil

Labor: Physical human activity that provides the goods or services in an economy. Ex: Coal Miners, Desk Jockeys, Retail Workers

Capital: Capital goods, real capital, or capital assets are already-produced durable goods or any non-financial asset that is used in production of goods or services.

Human Capital: Collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community.

Physical Capital: Tangible assets that are used in the production of goods. Entrepreneurs: Individuals who take risks to develop original ideas, start businesses, and fuel new economic growth.

Production Possibilities A production possibilities graph shows alternative ways that an economy can use its resources. The production possibilities frontier is the line that shows the maximum possible output for that economy.

Production Possibility Efficiency: means using resources in such a way as to maximize the production of goods and services. An economy producing output levels on the production possibilities frontier is operating efficiently.

Production Possibilities Growth: If more resources become available, or if technology improves, an economy can increase its level of output and grow. When this happens, the entire production possibilities curve “shifts to the right. ”

Production Possibilities What trade-offs are illustrated by the graph? What is the opportunity cost of increasing watermelon production from 20 to 21 million?

Opportunity Costs The opportunity cost of moving from a to b is… The opportunity cost of moving from b to d is… The opportunity cost of moving from d to b is… The opportunity cost of moving from f to c is… What can you say about point G? Unattainable

On your Guided Notes: 1. Create a production possibilities graph with your own two resources using the above numbers. Be creative. 2. List one reason for a shift to the left and one for a shift to the right. (Demand is constant)

Guns: Butter: • Primarily investing • Primarily social in military. investments. • Ex: Explosives, • Ex: Social guns, drones. security, school lunch programs, social security. Who?

Simulation: “In Real Life” In this simulation, students will become a “business owner” or a “provider. ” The “Business Owner” will receive money and a scenario sheet. They will have to map their own production possibility curve and figure out what they need (land , labor, or resource capital) in order to shift their curve to the right. Then they will buy their factor of production. Once they have purchased their item they will graph another curve showing their shift. “Providers” will have a sheet of information that tells the owner how much money they need to buy their factor of production as well as their own scenario. “Providers” will sell their products and read the scenario to the “business owners. ” Make dat’ money!