2. Factors of Production
Factors of production: The inputs into the process of production( Land ,
labour , capital, Entrepreneur).
production : The process that transforms scarce resources into useful goods
and services.
3. Return of Factors of Production
1. Land Rent
2. Labor Wage
3. Capital Interest
4. Entrepreneur Normal
profit .
4. Scarcity
Scarcity : Limited quantities of resources to meet
unlimited wants and needs.
5. Economic Systems
Socialistic System :
Maintains strong governmental control
Requires all productive resources to be owned and operated by the
government (Public ownership).
Forbids competition
Occurs in North Korea, Cuba .
6. Economic Systems
Capitalistic System :
Competitive markets .
Private ownership.
Freedom of choice.
Occurs in the United States, Hong Kong and Germany.
7. Economic Systems
Mixed System :
Maintains medium governmental control
Allows private ownership.
Allows competition in smaller, private sector
Occurs in Sweden and France
9. The Production Possibilities Curve
Production Possibility Curve (PPC) : A graph that
shows all the combinations of goods and services
that can be produced if all of society’s resources
are used efficiently.
Opportunity cost:The best alternative that we give up,
when we make a choice or decision.
10. The Production Possibilities Curve
Points Inside the PPC represent Inefficient points .
Points Along the PPC represent Efficient points .
Points Outside the PPC represent Unattainable
11. The Production Possibilities Curve
Economic growth: An increase in the total output of an
economy.
Growth occurs when a society acquires new resources or
when it learns to produce more using existing resources.
Growth shifts the ppf up and to the right
12. Work sheet :
1. Production is the process by which
A) products are used by consumers.
B) resources are transformed into useful forms.
C) products are converted into capital.
D) resources are allocated and distributed
2. That which we forgo, or give up, when we make a choice or a decision is
known as
A) equity.
B) causation.
C) correlation.
D) opportunity cost.
13. Work sheet :
1. Production is the process by which
A) products are used by consumers.
B) resources are transformed into useful forms.
C) products are converted into capital.
D) resources are allocated and distributed
2. That which we forgo, or give up, when we make a choice or a decision is
known as
A) equity.
B) causation.
C) correlation.
D) opportunity cost.
