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Factors of Production

30-45 mins
Critical thinking, Creative thinking
Remember, Understand, Application, Analysis
Factors of Production
Students will learn that the production of any product or service requires four factors of production
Students will learn that the production of any product or service requires four factors of production
1. Object of Study: one miniature candy bar/ Color pencil/ Pen for each student
2. One sheet of paper and a pen or pencil
3.One sheet of large drawing paper and colored pens or pencils


  1. At the beginning of the class Ask students to leave the Object of study  on their desk.
  2. Tell students that they are to list on paper everything that went into making the Object of Study from the time someone had the idea for that until the consumer purchased the object off the store shelf.
  3. Write on the chalkboard or overhead projector each of the things that went into making the object, as the class changes or modifies each thing on their paper. (Examples:Object of Study is a Candy bar- sugar, ink on wrapper, idea, machinery, advertiser, trucks for hauling, electricity, etc.)
  4. Once they have listed their points, then ask them which of the following required –
    • land
    • labor
    • capital
    • entrepreneurship
  5. Once they have categorized , its time to explain the definitions for each of the four factors of production & how each factor plays an important role in production of any kind of product
  6. Ask for any questions about the definitions
Have the students create a hypothetical timeline of the creation of the candy bar from start to finish. Instruct them to use four different colors, one for each factor of production. Reference Links:
1. What factor of production is a tractor?
A land
B labor
C capital
D entrepreneurship
2. What is the alternative you face if you decide to do one thing rather than another called?
A tradeoff
B opportunity cost
C incentive
D variable cost
3. What is the degree to which resources are being used efficiently to produce goods and services called?
A specialization
B productivity
C division of labor
D consumption
4. What are the gifts of nature that make production possible?
A. consumer goods
B. human capital
C. natural resources
D. input
5. Which would not be considered as capital by an economist?
A. a share of corporate stock issued by General Motors
B. an automobile used by General Electric
C. a crane used by a building contractor
D. a razor used by a barber
6. Which would not be classified by economists as land?
A. two thousand acres of virgin forest
B. a hydroelectric dam
C. crude oil reserves
D. iron ore deposits
7. What is the term for the individual that bring
s together the other economic resources necessary for production?
A. government units
B. entrepreneurs
C.corporate shareholders
D. the managerial elite
8. The fundamental economic problem is that resources are finite, but economic wants are insatiable.
What terms best describes this problem?
A trade-off
B productivity
C demand
D scarcity
9. Which factor of production include
any form of human effort exerted in production
A land
B labor
C capital
D entrepreneurship
Accurate, Clearly explained, Complete, Knowledgeable, Precise, Creative, Organized

You can start this activity at the beginning of the chapter. This way students will be able to grasp the terminology better.

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