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Module3 group3.valenzuela.taba.mercurio.parchamento
Module3 group3.valenzuela.taba.mercurio.parchamento
2Markets, Governments, and Nations The Organization of .docx
2
Markets, Governments, and
Nations: The Organization
of Economic Activity
Cem Canbay/age fotostock/Superstock
Learning Outcomes
After reading this chapter, you should be able to
• Identify the four types of productive resources, or factors of production, and the income paid to each for its
role in producing goods and services.
• Understand the basic economic questions that must be addressed by every economic system.
• Use a circular flow model to show the relationships between firms and households in markets in an
economy.
• Explain and give examples of the basic functions of government.
• Evaluate the benefits of specialization and exchange based on comparative advantage.
© 2019 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution.
28
Section 2.1 Limited Resources
Introduction
On March 23rd, 2018, Taco Bell surprised everyone in the field of economics by offering col-
lege tuition benefits for all 200,000 of its employees, even the part-time employees. In addi-
tion, the tuition bills of employees will be paid up front, moving Taco Bell ahead of Starbucks,
previously considered to have the best tuition benefits, whose employees have to pay for
tuition, take the class, and then submit for reimbursement.
But why would Taco Bell make these costly concessions to its employees? There are no stud-
ies that show that as people take more college courses they become better Taco Bell employ-
ees. Taco Bell has tapped into a key concept for this chapter, that of externalities.
An externality is the effect a transaction has on a third party who was neither the buyer nor
the seller. A commonly discussed negative externality is second-hand smoke. A toddler whose
parents smoke around her is neither the buyer nor the seller of the cigarettes, but she is
still affected by the harmful smoke. On the other hand, a coworker can experience positive
externalities due to other coworkers’ college education, even if he has never taken a course.
Studies show that college-educated employees are less likely to be truant and absent, so the
buyers (Taco Bell and the employees taking college classes) are affected, and the sellers (the
universities) obviously profit from the arrangement, but others are also affected. For example,
an employee can use the conflict resolution skills she learned from her online management
course to help all of her coworkers, as well as her customers. Taco Bell believes in the power
of positive externalities to help their company grow.
2.1 Limited Resources
To examine the process of choice, we can begin by identifying the scarce resources that
exist. The productive resources are divided into four broad categories: labor, land, capital,
and entrepreneurship. All resources used to produce goods and services fit into one of these
four categories, or factors of production. Goods are
objects that people value. Services are tasks per-
formed for people. For example, a hairstylist pro-
.
Rethinking the Framework for Production - MTI Future Tense 2012
This paper is a think-piece which reflects on current thinking on the economic model of production, and considers how a better understanding of the intangible input factors of production as well as the driving forces of the production process may support sustainable economic growth.
Recommended
Module3 group3.valenzuela.taba.mercurio.parchamento
Module3 group3.valenzuela.taba.mercurio.parchamento
2Markets, Governments, and Nations The Organization of .docx
2
Markets, Governments, and
Nations: The Organization
of Economic Activity
Cem Canbay/age fotostock/Superstock
Learning Outcomes
After reading this chapter, you should be able to
• Identify the four types of productive resources, or factors of production, and the income paid to each for its
role in producing goods and services.
• Understand the basic economic questions that must be addressed by every economic system.
• Use a circular flow model to show the relationships between firms and households in markets in an
economy.
• Explain and give examples of the basic functions of government.
• Evaluate the benefits of specialization and exchange based on comparative advantage.
© 2019 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution.
28
Section 2.1 Limited Resources
Introduction
On March 23rd, 2018, Taco Bell surprised everyone in the field of economics by offering col-
lege tuition benefits for all 200,000 of its employees, even the part-time employees. In addi-
tion, the tuition bills of employees will be paid up front, moving Taco Bell ahead of Starbucks,
previously considered to have the best tuition benefits, whose employees have to pay for
tuition, take the class, and then submit for reimbursement.
But why would Taco Bell make these costly concessions to its employees? There are no stud-
ies that show that as people take more college courses they become better Taco Bell employ-
ees. Taco Bell has tapped into a key concept for this chapter, that of externalities.
An externality is the effect a transaction has on a third party who was neither the buyer nor
the seller. A commonly discussed negative externality is second-hand smoke. A toddler whose
parents smoke around her is neither the buyer nor the seller of the cigarettes, but she is
still affected by the harmful smoke. On the other hand, a coworker can experience positive
externalities due to other coworkers’ college education, even if he has never taken a course.
Studies show that college-educated employees are less likely to be truant and absent, so the
buyers (Taco Bell and the employees taking college classes) are affected, and the sellers (the
universities) obviously profit from the arrangement, but others are also affected. For example,
an employee can use the conflict resolution skills she learned from her online management
course to help all of her coworkers, as well as her customers. Taco Bell believes in the power
of positive externalities to help their company grow.
2.1 Limited Resources
To examine the process of choice, we can begin by identifying the scarce resources that
exist. The productive resources are divided into four broad categories: labor, land, capital,
and entrepreneurship. All resources used to produce goods and services fit into one of these
four categories, or factors of production. Goods are
objects that people value. Services are tasks per-
formed for people. For example, a hairstylist pro-
.
Rethinking the Framework for Production - MTI Future Tense 2012
This paper is a think-piece which reflects on current thinking on the economic model of production, and considers how a better understanding of the intangible input factors of production as well as the driving forces of the production process may support sustainable economic growth.
Chapter 9Industrial RecruitmentIn previous clas.docx
Chapter 9
Industrial Recruitment
*
In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
*
Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in.
Chapter 9Industrial RecruitmentIn previous clas.docx
Chapter 9
Industrial Recruitment
*
In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
*
Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in.
Chapter 9Industrial RecruitmentIn previous clas
Chapter 9
Industrial Recruitment
*
In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
*
Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in ...
Chapter 9Industrial RecruitmentIn previous clas
Chapter 9
Industrial Recruitment
*
In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
*
Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in ...
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Chapter 9Industrial RecruitmentIn previous clas.docx
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In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
*
Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in.
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In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
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Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
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In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
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Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in ...
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In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment.
Economic growth contributes to an increase in consumption which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services.
Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs.
*
Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place
Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in ...
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- 1. FACTORS OF PRODUCTION Presented by Gopi shankar.S
- 3. ◦ Factors of production are the inputs needed for creating a good or service, and the factors of production include land, labor, entrepreneurship, and capital. ◦ Those who control the factors of production often enjoy the greatest wealth in a society. In capitalism, the factors of production are most often controlled by business owners and investors. ◦ In socialist systems, the government (or community) often exerts greater control over the factors of production.
- 4. Land, an important factor of production and is responsible for generating economic value. From agricultural land to commercial real estate, it takes various forms. Natural resources, such as oil and gold, can be extracted and refined for human consumption from the land. Cultivation of crops on land by farmers increases its value and utility.
- 5. Labor refers to the effort expended by an individual to bring a product or service to the market. Again, it can take on various forms. For example, the construction worker at a hotel site is part of labor, as is the waiter who serves guests or the receptionist who enrolls them into the hotel. Countries that are rich in human capital experience increased productivity and efficiency. The difference in skill levels and terminology also helps companies and entrepreneurs create corresponding disparities in pay scales. This can result in a transformation of factors of production for entire industries
- 6. In economics, capital typically refers to money. As a factor of production, capital refers to the purchase of goods made with money in production. Sometimes, money is not directly involved in producing a good or service. Instead, it facilitates the processes used in production by enabling entrepreneurs and company owners to purchase capital goods or land or to pay wages. For modern mainstream (neoclassical) economists, capital is the primary driver of value. It is important to distinguish personal and private capital in factors of production
- 7. Entrepreneurship is the secret sauce that combines all the other factors of production into a product or service for the consumer market. Eg-evolution of the social media behemoth Meta (META), formerly Facebook.
- 8. Another example of entrepreneurship is Starbucks Corporation (SBUX). The retail coffee chain needs land (prime real estate in big cities for its coffee chain), capital (large machinery to produce and dispense coffee), and labor (employees at its retail outposts for service). Entrepreneur Howard Schultz, the company’s founder, provided the fourth factor of production by being the first person to realize that a market for such a chain existed and figuring out the connections among the other three factors of production.