E.1.1.

.................................................................................................................................................................................................................. Standard E.1.2>

**Essential Understandings:**
Businesses need a combination of the factors of production. The factors of production are **land**, **labor**, **capital**, and **entrepreneurship**. Land is any natural resource. Labor includes the efforts of workers. Capital includes any man made goods used to produce other goods. Capital is sometimes divided into physical and human categories. Physical capital includes things like factories, machines, tools, etc. and human capital includes knowledge and special skills related to job performance. Entrepreneurship is the practice of combining the other factors of production to create goods and/or services.

Student-Written Example:
A local, family-owned pizza parlor uses all four factors of production. They use tomatoes and flour, which count as land. They use cooks and delivery drivers which count as labor. They use ovens and cash registers that count as physical capital. When they train new employees who learn new skills they add to their human capital. And the owner counts as an entrepreneur because he organizes all of these resources to produce pizzas.

Assessment Examples: Standardized Test Items and samples of student work.
a.) land b.) money c.) labor d.) physical capital
 * 1.) Which of these is not a factor of production?**

a.) physical capital b.) land c.) human capital d.) the stock market
 * 2.) Taking an economics course in high school may increase the value of which factor of production?**

Scroll down to the bottom of the page to check the answers.

The following PowerPoint slides were created by a student as part of a unit assessment. They may not be perfect but are an example of how students can show that they have met the performance criteria of the standard.

Answers to Multiple Choice Assessment Questions: 1=B, 2=C