Power Point 2 Factors of Production Economics Unit

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Power. Point #2: Factors of Production Economics Unit 1

Power. Point #2: Factors of Production Economics Unit 1

Essential Question • Explain the Factors of Production and the Production Possibilities Curve

Essential Question • Explain the Factors of Production and the Production Possibilities Curve

E¢ONOMIC$

E¢ONOMIC$

Factors of Production (Scarce Resources) • Land - natural resources of “gifts of nature”

Factors of Production (Scarce Resources) • Land - natural resources of “gifts of nature” • Labor - physical and mental talents of workers • Capital - tools, machinery, manufactured goods used to produce consumer goods • Investment • Entrepreneurial Ability - the idea or “sparkplug”, innovation, risk

Watch this video clip and explain each Factor of Production • https: //www. youtube.

Watch this video clip and explain each Factor of Production • https: //www. youtube. com/watch? v=7 c 4 NRc. KDr zw&t=2 s

Production Possibilities Curve • The Production Possibilities Curve (ppc) shows the maximum combination of

Production Possibilities Curve • The Production Possibilities Curve (ppc) shows the maximum combination of goods and services that can be produced from a given amount of resources. • Assumptions: • Full Employment • Fixed Resources • Fixed Technology • Two Goods – Consumer Goods (Pizzas) – Capital Goods (Industrial Robots)

How does a production possibilities curve work? • The production possibilities curve shows the

How does a production possibilities curve work? • The production possibilities curve shows the opportunity costs of producing two goods in an economy. • An economy that is perfectly efficient will produce on the curve instead of inside or below the curve

The Guns versus Butter model • An example of a simple production– possibility frontier.

The Guns versus Butter model • An example of a simple production– possibility frontier. • Demonstrates the relationship between a nation's investment in defense and civilian goods. • In this example, a nation has to choose between two options when spending its finite resources.

Production Possibilities Model Marginal Benefit & Marginal Cost Optimal Allocation of Resources a c

Production Possibilities Model Marginal Benefit & Marginal Cost Optimal Allocation of Resources a c 15 MC MB = MC e 10 5 0 b MB d 1 2 3 Quantity of Pizza

Watch this video clip and explain how scarcity and choices effect producers • https:

Watch this video clip and explain how scarcity and choices effect producers • https: //www. youtube. com/watch? v=t. W 4 G 5 IPpz. FY &t=1 s

Production Possibilities Table Robots 10 9 7 4 0 Pizza 0 1 2 3

Production Possibilities Table Robots 10 9 7 4 0 Pizza 0 1 2 3 4

Production Possibilities Model Industrial Robots Production Possibilities Curve A’ 14 13 12 11 10

Production Possibilities Model Industrial Robots Production Possibilities Curve A’ 14 13 12 11 10 9 8 7 6 5 4 3 2 1 B’ Unattainable A B G 1. 1 Economic Growth C’ C D’ D Now Attainable E’ E 0 1 2 3 4 5 6 7 Pizzas 8 9

Production Possibilities Model Industrial Robots Production Possibilities Curve A’ 14 13 12 11 10

Production Possibilities Model Industrial Robots Production Possibilities Curve A’ 14 13 12 11 10 9 8 7 6 5 4 3 2 1 B’ Unattainable A B Law of Increasing Opportunity Cost C’ C D’ Shape of the Curve D Attainable E’ E 0 1 2 3 4 5 6 7 Pizzas 8 9 W 1. 2

Production Possibilities Model Industrial Robots Production Possibilities Curve 14 13 12 11 10 9

Production Possibilities Model Industrial Robots Production Possibilities Curve 14 13 12 11 10 9 8 7 6 5 4 3 2 1 A’ B’ Unattainable C’ U D’ Under or Unemployment E’ 0 1 2 3 4 5 6 7 Pizzas 8 9

Answer the Essential Question in the minimum of five sentences • Explain the Factors

Answer the Essential Question in the minimum of five sentences • Explain the Factors of Production and the Production Possibilities Curve