The british generals effectively told their soldiers

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Unformatted text preview: service. Computers are used to produce books and magazines, trucks are used to carry groceries to your local supermarket, and factories produce most, if not all, of the items you see as you look around your classroom. QUESTION: I thought “capital” referred to money. When my uncle said he needed more capital to invest in his business, 26 Chapter 1 What Is Economics? would be. The British generals effectively told their soldiers that if they deserted, they would have to forfeit their freedom or their lives. Of course, the problem is that a stiff penalty is not effective if deserters cannot be found. Therefore, the generals had to make it easy to find deserters, which they did by dressing them in bright red uniforms. Certainly it was possible for a deserter to throw off his uniform and walk through the countryside in his underwear alone, but in the harsh winters of New England, doing so would guarantee death. He had almost no choice but to wear the bright red uniform. THINK ABOUT IT In battle, the British soldiers marched toward their enemy in neat rows. Was this foolish, or was this formation perhaps done based on a sound economic reason? What economic explanations would you propose for this type of formation? wasn’t he talking about needing more money? ANSWER: Maybe your uncle did use the word “capital” as a synonym for “money.” But capital to an economist refers to such things as machinery, tools, and so on—things that can be used as resources for further production. So, when an economist says a firm wants to buy more capital, he is saying that the firm wants to buy more machinery and tools. 01 (002-029) EMC Chap 01 11/17/05 4:04 PM Page 27 Entrepreneurship If someone asked you to point to the resource land, you might point to a forest. For the resource labor, you might point to yourself as an example. To show capital, you might point to a computer. But what would you point to if someone asked you to give an example of entrepreneurship? This resource is not so easy to identify. Entrepreneurship refers to the special talent that some people have for searching out and taking advantage of new business opportunities, as well as for developing new products and new ways of doing things. For example, Steve Jobs, one of the developers of the first personal computer, exhibited entrepreneurship. He saw a use for the personal computer and developed it, and hundreds of thousands of customers then purchased his product—the Apple computer. Of late, millions of dollars in revenue have been generated by a relatively new Apple product, the iPod. QUESTION: Since only people can exhibit entrepreneurship, why isn’t entrepreneurship considered a type of labor? In Defining Terms 1. Define: a. tangible b. intangible c. goods d. utility e. services f. land g. labor h. capital i. entrepreneurship 2. The resource that involves goods used to produce other goods is ______________. Reviewing Facts and Concepts 3. Identify the following resources. Write “Ld” for short, why aren’t there only three resources—land, labor, and capital— instead of four? ANSWER: Economists consider entrepre- neurship sufficiently different from the ordinary talents of people to deserve its own category. Consider this explanation. Both the star player on your high school basketball team and LeBron James fall into the category “basketball player,” just as entrepreneurs and laborers both fall into the category “people.” But are they the same in terms of the impact they would have on the success of a team? Even if the star of your team is an outstanding player, it is unlikely that you would consider him to be “in the same category” as LeBron James. LeBron James is considered a superstar—he has extraordinary basketball talents. So it is with labor and entrepreneurship. The ordinary mental and physical talents of people are considered labor. The special talents that are directed toward searching out and taking advantage of new business opportunities, products, and methods are considered entrepreneurship. land, “Lb” for labor, “C” for capital, and “E” for entrepreneurship. a. Francis’s work as a secretary b. iron ore c. a farm tractor d. a computer used to write a book e. a comedian telling jokes on a television show f. a singer singing at an outdoor concert g. your teacher teaching you economics h. someone inventing a new product i. crude oil j. oil-drilling equipment entrepreneurship The special talent that some people have for searching out and taking advantage of new business opportunities and for developing new products and new ways of doing things. Critical Thinking 4. Entrepreneurship is sometimes the “forgotten resource.” Why do you think it is easier to forget entrepreneurship than, say, labor or capital? Applying Economic Concepts 5. Some economists will talk about the resource time. Under what category of resource (land, labor, capital, or entrepreneurship) would you most likely place time? Explain your answer. Section 3 Basic Economic L...
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This document was uploaded on 01/16/2014.

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