What every economy, business and consumer must answer!
How do businesses make money?
Businesses make money by selling goods and services
What are Goods and Services?
Goods
Goods are physical objects such as:
Computers
Sneakers
Cars
Services
Services are actions that a person performs for another person.
Teaching
Cleaning
Fixing my car
Economic Questions
All economies, businesses and people must answer the following questions:
What goods and services will be produced?
How will the goods and services be produced?
Who are the goods and services for?
How much will be produced now and how much later?
What are resources?
Resources are the materials from which goods and services are made.
There are 3 types of resources.
1. Human Resources
A person’s knowledge, skills, attitudes and abilities determine that individual’s value as a human resource. The more rare the skill, knowledge etc. the more valuable and higher pay.
Ex. Unskilled workers- low pay
Teachers- high level of education, higher pay
Doctors- a lot of education and rare skills, well paid
NFL quarterbacks- rare physical abilities, very well paid
2. Natural Resources
Raw materials from which goods and services are made.
Land
Timber
Oil
3. Capital Resources
Money and property used to produce goods and services
Tools
Buildings
Machines
My Pizzeria
Imagine we start a pizza business. What are the
Human Resources
Natural Resources
Capital Resources
Human Resources
A Manager
Pizza maker (cook)
Cashier
Dishwasher
Delivery person
Who will get paid the most? Why?
Natural Resources
Flour
Cheese
Vegetables
Meat and other toppings
Tomato Sauce
Gas for pizza oven
Water
Electricity
Paper Plates
Paper Napkins
Note: these items are used once, then disposed of.
Capital Resources
Building/Storefront for the restaurant
Pizza Oven
Cash register
Counter
Refrigerator/Freezer
Re-usable plates
Re-usable napkins (cloth)
Car for deliveries
Create a Business
What goods or services will you provide?
What is the name of your business?
Where will you locate your business?
Why did you choose this location?
List the human, natural and capital resources you’ll need.