Transcript 1149067Factors of Production

Factors of Production
and
Measuring the Economy
• Goods: things we make and purchase.
• Services: work performed by someone in
exchange for payment.
Natural
Resources
Entrepreneurs
4 Factors
of Production
Capital/
Capital Goods
Labor
(Human
Resources)
Natural Resources
• “gifts of nature”
• These make production possible
• Examples?
Labor
(Human Resources)
• The workforce
• Supplies knowledge,
skills, etc. to get work
done
Capital/Capital Goods
• Capital refers to money needed to
produce goods and services.
• Capital Goods are manufactured goods
used to make other goods and services.
• Examples: machines, buildings and tools
Entrepreneurs
• People who start new businesses, create
new products, or improve on a process.
• Can you think of any specific
entrepreneurs?
Measuring the Economy
• Gross Domestic Product (GDP):
The total value (in $$$) of all the final goods
and services produced in a country in one
year.
GDP continued…
• Economists use the GDP to analyze how
the economy is doing.
• The GDP is also an indicator of a country’s
standard of living, the quality of life
based on the possession of necessities
and luxuries that make life easier.
Weaknesses of the GDP
• It is not a measure of a society’s overall
well-being.
• Statistics can be misleading.
• GDP measures quantity (number), not the
quality of goods.
Measuring the Economy
• Net Domestic Product (NDP):
Another way to measure the economy.
NDP subtracts the loss in value
(depreciation) of capital goods from the
GDP.