Factors of production - BBI

UNIT 1: FACTORS OF PRODUCTION

Questions from Day 1:

1.Create a list of (what you believe to be) essential (necessary) goods for all member of our society.

2.Create a list of essential (necessary) services for all members of our society.

3.Do “essential” goods and services differ by geographic region? Explain and give examples.

THE PRIVATE SECTOR▪Businesses are individually owned and

operated.▪The primary purpose of most private sector

businesses is to make a profit.▪Pros:▪Usually more efficient.▪Profit motive and competition drive innovation.

▪Cons:▪May be more concerned with profit than with

providing high quality service at an affordable rate

THE PUBLIC SECTOR▪ Federal, Provincial and Municipal governments

(“employers”)▪ Employees of the various levels of government are often

called “public servants”▪ Pros:▪ Purpose is to provide services to meet the needs of

society▪ Services are more affordable

▪ Cons: ▪Often “slow”, inefficient.▪May create artificially low prices (education, electricity).

TYPES OF BUSINESSES:▪Crown Corporations: A business that is owned and

operated by the municipal, the provincial, or the federal government.

▪Purpose: Provide services to the public.

▪For example: VIA Rail, Canada Post, the CBC.

PRIVATIZATION▪When a publicly (government) owned business

or industry is sold to the private sector:▪ Saves government money.▪ Private sector may be better suited.

▪The government may stop providing the service and let the private sector fill the gap.▪Or the government may sell their assets to a

private buyer

THE FACTORS OF PRODUCTION

▪“inputs” needed for the creation of G & S

▪Natural Resources▪Materials supplied by nature from which everything in the

world is made. (primary or extractive industries)▪Agriculture, fishing/trapping, mining, water, fuel/energy,

logging/forestry

▪Raw Materials▪items used in the manufacturing of other goods. ▪Often the items gathered from extractive industries


▪Human Resources (labour/human capital)▪the people who work to create the goods and services

(e.g. farmers, factory workers, construction workers, website designers, teachers, nurses, pilots)

▪Management▪The individuals who make strategic decisions for

organizations; including the allocation of the factors of production such as capital and human resources


▪Capital Resources▪Financial resources (money, stocks, bonds) and

machinery, equipment, tools, trucks, factories, buildings, etc (long-lived assets)

▪Information▪Knowledge and data about new technology,

customers, competitors, political conditions and sources of supply

ECONOMIC RESOURCES ▪In most cases, it takes a combination of all 6

economic resources to create the G&S that businesses provide.

▪What happens if there isn’t enough of an economic resource? (e.g. oil)▪The price of the G&S increases ↑▪Alternatives must be found for the resource.

ACTIVITY: groups of 2

▪ In groups of 2, determine which factors of production were involved in the creation of your goods▪ Be specific: e.g. if raw materials were involved –

name the specific materials

▪Be prepared to share with the rest of the class

▪GOODS (You will be assigned 1-2 goods, then complete your analysis):

Questions:1. Complete this statement: “without _________ , businesses

would have no need to produce anything.”

2. Identify 2 non-profit and 2 for-profit businesses in your community and explain the type of services (or goods they provide).

3. List 5 natural resources in or near your community. Are any of them environmentally at risk? Explain.

4. Explain how money can function as a capital resource for both producers and consumers.

5. Research and list 3 public sector (be specific about company and/or department) employers and 3 private sector employers. What do these organizations do?

Education

Factors of production - BBI