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American
Production
UNIT 7
Goods and Services
 Goods and Services are all things that are produced by a
country’s economy.
 Goods are things that are manufactured that consumers can
buy and own.
 Services are things that people do.
 Consumers get the benefit of the service but do not
own anything as a result.
 You CAN have some products that are a combination of
goods and services.
 Ex. House painters.
Goods and Services
 Productivity: the rate and which goods and services are
produced and the efficient use of resources.
 Specialization: people, businesses, regions, and nations
focus on things they do better than others.
 Types of Services
 Personal: performed on consumers
 Repair: performed on goods you own.
 Other: retail services, entertainment services, banking and
legal services.
GDP (Gross Domestic Product)
 GDP: the market value of all goods and services produced
annually (one year).
Decisions
 Trade-offs: trading one thing for another
 Opportunity Cost: the value of choosing one thing over
another.
 Ex. Living in the city vs. living in the country.
 Cost-benefit analysis: Economic model, compares costs
and benefits of a decision.
Production
 Americans production of goods and services depends
heavily on the process of mass production.
 Mass Production: the rapid production by machine of
large numbers of identical objects.
Factors of Production
 Key Questions of Production:
 What to produce?
 How to produce?
 For whom are we producing?
 Four Factors of Production:
 Natural Resources/Land
 Capital
 Labor
 Entrepreneurship
Factors of Production
 Natural Resources: things provided by nature without human
intervention.
 Ex. Land, animals, water, minerals, etc.
 Many natural resources are limited.
 Capital: equipment used to make other goods and services
 Ex. Tools, truck, machines, etc.
 Financial capital: money used to buy tools/equipment.
 Get loans from investors, stock.
Factors of Production
 Labor: human effort, skills, and abilities to produce goods
and services.
 Entrepreneur: person who organizes and manages the factors
of production for creating a business.
 Very important to the economy.