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- Review the content from the previous session.
- Explain that entrepreneurs take the risks of investing their money or capital in businesses with the hope of making a profit.
- Display the following factors of production and discuss them:
• Labor, also called human resources, is any form of human effort used in the production of goods and services.
• Capital refers to human-made resources (tools, buildings, equipment) used in the production of other goods and services.
• Natural resources are those items provided by nature that are used in the production of goods and services.
• An entrepreneur is the risk-taker who organizes the other resources for production.
- Explain that all production depends on natural resources, which need capital to fund conversion to usable goods and labor to make the conversion.
- Ask students to suggest how an entrepreneur may acquire the money to start a business. Divide the class into groups and assign a product to each group and instruct them to determine the overhead they will need to produce the product. Direct them to determine how they will get the money needed to complete production. Make the product small and allow time for them to work in small groups and communicate with each other about how they will get the money to develop, produce, and market their product. Guide them throughout the exercise by asking questions such as the following:
• Where will the products be made?
• Will rent have to be paid?
• Will employees be needed to help?
• Will employee benefits be provided?What will be the source of the money?
- Encourage students to begin to examine what it takes to operate a business. Allow students to work on this for the remainder of the class session. Require them to prepare a group report that will explain how they addressed the various questions.
NOTE: This one-session assignment could become a large project that spans several weeks and requires students to research actual production costs on a particular product for a class presentation.
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