factors of production land labor capital entrepreneurialism resources necessary to produce a good or...

Factors of Factors of ProductionProductionFactors of Factors of ProductionProduction

• Land • Labor• Capital• Entrepreneurialism

• Land • Labor• Capital• Entrepreneurialism

Resources necessary to

produce a good or service

Resources necessary to

produce a good or service

Land: The Natural Resource

–Trees–Sand–Water–Real Estate

Labor: The Human Labor: The Human ResourceResource

• Thoughts and physical input of humans on production

Capital: “Stuff used to make other stuff”

• Factories

• Hammers

• Money

• Any resources that are created in Any resources that are created in order to make a product or order to make a product or service.service.

Oprah Winfrey- Media Mogul• Runs her own daytime

show and media production company.

• Oprah is the richest African American woman in America - approx $1 billion net worth

Bill Gates- Founder of Microsoft

• Net Worth $51 Billion

• Harvard University, Drop Out

• Created the Windows operating system

Sam Walton- Founder of Wal-Mart6. Christy

7. Jim

8. Robson

9. Alice

10. Helen R

Who are these people?

Howard Schultz

• Owner of Seattle Supersonics

• Worth about a Billion

• Coffee Maker

• JawsJaws

• DuelDuel

• Indiana JonesIndiana Jones

• Schindler’s ListSchindler’s List

• Close EncountersClose Encounters

• ET ET

• Empire of the SunEmpire of the Sun

• War of the WorldsWar of the Worlds

• Jurassic ParkJurassic Park

• Color PurpleColor Purple

Steven Spielberg

Pierre M Omidyar- Founder of Ebay

• Tufts University, Bachelor of Arts / Science

• Worth (give or take) $10.2 Billion

Shawn Carter: CEO Def Jam Records

• Worth about $320 Million–Music

–Clothes

–Shoes

–Ownership of the NJ Nets

Kevin Plank: Inventor and Owner of Under Armour

• Played Football at MD, frustrated with changing his shirt all the time.

• After graduating he spent several MONTHS looking for the perfect fabric.

• He eventually gave a few shirts to friends in the NFL & had them try it out. – The rest is history.

EntrepreneursEntrepreneurs•People who take the risks of organizing productive resources to make goods and services.

–Profit is the incentive that leads to accepting the risks of business failure.

Create a list of Create a list of characteristics for the characteristics for the

success of these individuals.success of these individuals.

What risk did they assume What risk did they assume when they started?when they started?

Would You Take the Would You Take the Risk?Risk?

You have been given a small You have been given a small business loan by the bank. business loan by the bank.

•What entrepreneurial idea What entrepreneurial idea do you have? do you have?

•Why would it be a success? Why would it be a success? •What would you need to What would you need to get it started?get it started?

Merck Profit Almost Doubles in 1st Quarter

Merck reported Monday it nearly doubled its 1st quarter profits. The drug company’s sales are up from last year. The maker of allergy and asthma pill Singulair and cervical cancer vaccine Gardasil posted net income of $3.3 billion from January to March period, up from $1.7billion a year ago.

From the Baltimore Examiner (April)

Incentives

• 5,000 People die a year from Asthma

• 3,800 People women die of cervical cancer.

Public vs Private

• Can a person make too much profit?

• Predict what would happen if the government estabilshed “acceptable level of profit” laws.

– Consider how this changes incentives for both buyers and sellers.