Economics 11

Chapter 3 Productive Resources

February 2012

• our ability to produce goods and services depends on the quality and quantity of productive resources

• productive resources include:

- capital resources (tools, factories, machines)

- natural resources (forests, soil, minerals)

- human resources labour (workers of all kinds)

- the entrepreneur (the self-employed business owner)

Natural Resources

• natural resources are all the resources that occur in nature that have value and may be used in production

includes minerals, forests, water, fish

• include all the “free gifts of nature”

Natural Resources

• Canada’s principal field crops are wheat, barley, vegetables, corn, and tobacco

livestock and livestock products are also very important

• forestry is a major industry, especially in British Colombia, Ontario, Quebec and the Atlantic provinces

Natural Resources

• Canada is one of the world’s leading producers of newsprint, paper, and lumber

• commercial fishing is another major industry, however problems plague the seafood industry (over fishing, cod moratorium)

• Canada also has reserves of coal, oil and natural gas

Human Resources

• natural resources are useless without human resources

• human resources (labour) are the services provided by workers

• examining human resources involves considering not only the number of workers but also their skills, knowledge, initiative, and effort

Human Resources

• human resources includes the services of labourers, doctors, dentists, prime ministers, computer technicians and crane operators

Human Resources• production depends on four major characteristics of human

resources:

health - workers who are continually sick are less productive than healthy

workers

education - the better educated a population is, the more productive a country

tends to be

work attitudes - Canadians have values and attitudes that make them highly

productive workers

population size - Canada’s average population density is 3 persons per square

kilometre (one of the lowest in the world)

Capital Resources

• capital resources are goods that are used in production of other goods and services

• capital resources today are obviously much better than 50 years ago (farm equipment, dentist)

• a capital good is a good purchased in order that something else can be produced or provided (a means to an end)

Production

• production includes any activity that serves to satisfy human wants

• production involves the combining of economic resources (land, labour, capital, and entrepreneurial ability) to produce goods and services to meet our needs

• generally, all productive activity can be divided into three categories: primary, secondary, and tertiary

Production

- people who work in primary industries work close to the land

farmers, miners, lumberjacks, oil riggers and fishers (all contribute staple products)

Production

- secondary industries are involved in manufacturing the staple products into finished goods

a finished good can be a capital good or a consumer good

Production

• tertiary industries are responsible for everything that goes on with the finished good (from transporting to selling)

tertiary industries are the vital link between the producer and the consumer

- service workers comprise about 75% of Canadian workforce

Circular Flow• we can view our entire economy as a flow of goods and services

and money between and among the four main actors in our economy:

governments, businesses, households, and other countries

• first we will look at the circular flow between households and businesses

- households include all families and unattached individuals living on their own

- businesses include all kinds of organizations engaged in economic activity