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What?
How?
For Whom?
What must we Produce?
Society must choose based on its
needs
How to Produce?
Society must choose based on its
resources
For Whom to Produce?
Society must choose based on its
population and other available
markets
Technology has fundamentally changed how we
live. “I want my MTV”…and my refrigerator, color
tv, and microwave oven.
Which group of people ultimately determines
the products that a free enterprise economy
produces?
1 2 3 4
Factors of Production
Once a society is ready to work on
answering the three basic questions,
they must then turn to their available
factors of production (the
resources needed to produce what
people want and need).
The society’s limited natural
resources
Landforms
Minerals
Vegetation
Animal life
Climate
Capital
The means by which something is
produced
Money
Capital Goods - Any
Tools tangible assets that an
organization uses to
Equipment produce goods or
Machinery services such as office
buildings, equipment
Factories and machinery.
Labor (Human Resources)
The workers who apply their efforts,
abilities, and skills to production
Physical Abilities
Mental Abilities
Entrepreneurship
Risk-takers who combine the land,
labor, and capital into new products
Makes basic business policy decisions
Innovator for new products, production
techniques, organizational forms
Bears the risk of time, effort, and funds
Production
Creating goods and services—the
result of land, capital, labor, and
entrepreneurs
Bill Gates
1. Capital
25% 25%
2. Land
3. Labor
4. Entrepreneurship 25% 25%
1 2 3 4
Factory
1. Land
25% 25%
2. Labor
3. Capital
4. Entrepreneurship 25% 25%
1 2 3 4
Iron Ore
1. Land
25% 25%
2. Labor
3. Capital
25% 25%
4. Entrepreneurship
1 2 3 4
Assembly line worker
25% 25% 25% 25%
1. Land
2. Labor
3. Entrepreneurship
4. Capital
1 2 3 4
Capitalism is a competitive economic
system in which private citizens own the
factors of production.
50% 50%
1. True
2. False
1 2
The entrepreneur organizes land, capital, and
labor for production in hopes of earning a profit.
50% 50%
1. True
2. False
1 2