Lessons 4 · 1 lessons · E. Sariqov, B. Khaydarov. Foundations of Economics, Grade 8. “Huquq va Jamiyat” Publishing House, Tashkent, 2019
4
Production and its factors
Textbook: pp. 20–23
GoalUnderstands the essence of production, the sectors of the economy and the four factors of production (natural, capital, labour, entrepreneurial ability) and identifies them in an example.
New words
production: creating economic goods to satisfy human needs · ishlab chiqarishfactors of production: resources drawn into the production process · ishlab chiqarish omillarimeans of production: buildings, machines, tools and raw materials (capital factors) · ishlab chiqarish vositalarientrepreneurial ability: the ability to take economic decisions and organise production · tadbirkorlik layoqati
Explanation
Production is the process of creating economic goods to satisfy needs. Those who create goods are producers, and those who use them are consumers. The economy has three sectors: primary (raw materials taken from nature: mining, logging), secondary (raw materials processed into finished goods: clothes, notebooks) and tertiary, the service sector (education, healthcare, tourism). A service is not a physical object and cannot be stored in a warehouse – it is consumed as it is provided. The resources drawn into production are called factors: natural factors, capital factors (buildings, machine tools, raw materials – the means of production), labour factors and a fourth one – entrepreneurial ability, that is, combining the other factors and organising the work while taking risk. In a market economy entrepreneurial ability is especially important.
Worked examples
A school-furniture workshop: the natural factor is timber; labour is the carpenters; capital is the planers, saws, machine tools and the workshop building; entrepreneurial ability is the owner, who finds funds, hires workers, looks for customers and takes the risk for the result.
Picking cotton in the field is the primary sector; sewing a shirt from thread is the secondary sector; an alteration studio and a hairdresser are the tertiary sector (services).
Class activity
“Find the factors”: the class picks a product (for example, juice). Groups write factors on the board in four columns – natural, capital, labour, entrepreneurial; the most complete list wins.
Practice
1
Sort into primary, secondary or tertiary sector: oil extraction, assembling bicycles, a doctor's appointment, growing wheat, making sweets.
Primary: oil extraction, growing wheat. Secondary: assembling bicycles, making sweets. Tertiary: a doctor's appointment.
2
Give one example of each of the four factors for a bakery factory.
Natural – water and the land the plant stands on; capital – an oven, a dough mixer, flour (raw material); labour – bakers; entrepreneurial ability – the owner who organises and runs the plant.
3
How do services differ from material products?
A service cannot be stored in a warehouse: it is consumed while it is being provided (for example a haircut).
4
Why is entrepreneurial ability counted as a separate factor? Justify your answer.
Because resources do not turn into production by themselves: someone has to combine them, take decisions and risks, and organise the work.