Productive Resources

1
Productive Resources

• Three basic productive Resources
• Natural Resources
• Things such as minerals, water, trees, and land
• EX Cotton is a natural resource used to make
  jeans
• Human Resources
• Also called Labor
• Refers to the people who produce goods and
  services
• EX Mailman that delivers the mail is a human
  resources

2
Productive Resources

• 3. Capital Resources
• Refers to the buildings, machines, tools, and
  equipment used in production.
• EX Printing press to produce newspapers is a
  type of capital resource
• You will hear me refer this type of resource as
  capital

3
Fourth Productive Resource

• Entrepreneurship
• This refers to the skill, foresight, and
  determination it takes to start a business and
  produce a product
• Entrepreneurs purchase natural, human, and
  capital resources and use them to produce goods
  and services
• Entrepreneurs hope that many consumers will buy
  the goods and services, so they can make a profit
• They are also known as the risk takers of the
  production process

4
Scarcity

• A productive resource that is not available or
  has limited availability
• If something is scarce, its value increases based
  on the demand
• If there is a large supply of a productive
  resource, than the value will decrease.
• This is know as the Supply and Demand Concept

5
Supply and Demand / Price

• When the supply of a product goes up, the demand
  of that product goes down, and the price of the
  product will all decrease in value
• When the supply of a product decreases, the
  demand of the product then increases, and the
  price rises due to increase of demand
• It shows that the consumer decides what the price
  of a product will be overall

6
Opportunity Cost

• When an entrepreneur makes a decision, the value
  of his/her next best alternative is the
  opportunity cost
• Opportunity cost of producing a particular good
  or service is what is given up by not producing
  another
• EX McDonalds chosing to make the Big Mac
  instead of the Whopper opportunity cost is the
  Whopper

7
Laissez-Faire Theory

• French term meaning hands-off or leave alone
• The theory or system of government that believing
  that the government should intervene as little as
  possible in the direction of economic affairs
• Lets companies make all economic decisions, not
  the government
• Concept used in a market economic system

8
Key Points to Remember

• 1. All countries have scarce productive
  resources
• - Some resources are more scarce than others
• - The more scarce, the higher the price
• 2. All countries use scarce productive resources
  to produce goods and services
• 3. There is always an opportunity cost when a
  country uses its productive resources
• - The opportunity cost is the next best use for
  the resources