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Production
Artwork of Caleb Biddle
Survey of Social
Studies
Economics
Mr. Biddle
The 3 Branches of
Industry
3 Branches of Industry
Production
Distribution
Consumption
• Production- the
application of tools and a
processing medium to the
transformation of raw
materials into finished
goods for sale
The 3 Branches of
Industry
• Distribution- the
process between the
Manufacturer and
retailer, where goods
are delivered to
various places and
areas
• Getting your goods
from the factory to the
store
The 3 Branches of
Industry
• Consumption- the
final use of goods and
services to provide
utility
• The buying and
consuming of the
product
Productivity
• The single most
important determinant
of a nations standard
of living is the
productivity of its
resources
Three Factors of
Production
• Factors of Production are resources necessary to
produce what people want or need
• Land is the society’s limited natural resourceslandforms, minerals, vegetation, animal life and
climate
• Capital is the means by which something is
produced such as money, tools, equipment,
machinery, and factories.
• Labor is the workers who apply their efforts,
abilities and skills to production.
Factors that effect
Production
• Technological Change
• Investing in Capital
Goods
• Human Capital/Resources
Technological Change
• Technological change may
increase production and
employment by making
products more affordable
• Ex- the assembly line
made automobiles more
affordable to the average
household
• It stimulated production
and employment in the
auto industry
Technological Change
• Technological change
can also lead to workers
losing their jobs, or being
displaced by a machine
– You can train people to
use machines to increase
productivity in the work
place
Investments
in Capital Goods
• Capital Goods- include
all human creations used
to produce other goods
and services
• Ex- Factories, Machines,
Tools, Trucks, and etc.
Investments
in Capital Goods
• Investing in a capital
goods increases
productivity, because
it makes you more
efficient with your
time
Investments
in Capital Goods
• Investing in a capital
good may take time and
money, but it may be
worth it in the long run
– Buying a tractor helps
farmers produce more
goods
• When a nation produces
capital goods it leads to
economic growth
Human
Capital/Resources
• Labor is the resource
most commonly used to
measure productivity
– Measure by hour, day,
or week
Human
Capital/Resources
• The resource most
responsible for increasing
labor productivity is
capital
• Capital- tools, equipment,
and factories used in the
production of goods and
services
Human
Capital/Resources
2 types of Capital:
Human Capital- the
accumulated
knowledge, skill, and
experience of the labor
force
- As workers acquire
more human capital
their productivity and
income grow
Human
Capital/Resources
Physical Capital- the
same as capital good
-any good that is used
to produce a final
product
Federal Reserve
• Gov’t organization that
monitors the Economy
Duties
• Regulate the monetary
supply and interest rates
• Lend money to banks
• Advise the President and
Congress on economic
decision making
Trickle Down
Economics
• The idea in American
Politics that tax breaks
to big businesses and
the wealthy will
benefit poor
individuals and the
economy as a whole
• Money will trickle
down to the poor
Also referred to as Reaganomics