Capital Chips (Part 1)
This lesson printed from:
Posted July 30, 2002
Author: Council for Economic Education Technology Staff
Posted: July 30, 2002
Updated: May 28, 2010
Through the use of a historical timeline of the capital investments made by the company the resulting benefits will be examined. The benefits from the capital investments of Herr Foods, Inc. will be related to their effect on the standard of living. Then students will visit one of three websites, select an innovation/invention of their choice to analyze in terms of its impact on productivity and the standard of living. Finally, the teacher will select one invention/innovation from a designated website and have students analyze it in the same economic terms as the focus of this lesson and write an essay summarizing the innovation/invention.
Productivity is a measurement of output resulting from the use of productive resources or inputs. It refers to the amount of output per unit of input over a period of time. An increase in productivity may mean producing the same amount with fewer inputs, producing more output with the same inputs, or a combination of the two. Companies look for ways to maintain and increase the level of productivity in order to remain competitive while maintaining profits. One way of accomplishing this is through investing in capital goods such as machines, tools, and new ideas used in the production process. Technological improvements in capital goods are a leading cause of increase in productivity.
After completing the following activities, your students will develop a better understanding of the economics associated with productivity. In the first activity your students will explore the concepts that are connected to productivity. In the second activity your students will investigate the Herr's Potato Chips, a company that is constantly working at incorporating new techniques to satisfy the customer. Finally, in the third activity your students will use the Internet to search for inventors and inventions. Their task is to find an invention they would like to learn more about and learn how that invention improves its environment. After your students complete all three parts to this lesson they will find a series of questions that will explore what they have learned from Capital Chips about productivity.
Part 1 Introduction
Your students are going to be a web hunters today. Their mission will be to use the sites provided to explore the requested concepts. Wish them good luck on their mission!
First you will instruct students to open the version of the worksheet you have chosen to use.
|PDF Interactive Worksheet|
|PDF Print Worksheet|
Once the students have the worksheet available, instruct them to use the list of on-line glossaries below to fill in definitions for each of the terms on the worksheet above. They will not find all the definitions at one site.
- "Economic Geography Glossary" : An online dictionary and glossary in economic geography.
- "AmosWeb Glossary " : This glossary defines a wide variety of economic terms, sometimes providing detailed explanations and diagrams.
- "Cambridge Dictionaries OnLine" : An online version of "Cambridge Dictionary."
- "Merriam Webster OnLine Language Center" : An online version of "Merriam Webster's Collegiate Dictionary."
- "Babylon-Pro" : A powerful translation, information and conversion tool, that instantly provides relevant information about any word or value you click on.
If the students are using the PDF interactive worksheet, have them click on the terms when they are finish filling in the terms. The terms will lead them to pages with the information given below. If the students are not using the PDF interactive worksheet you may want to elaborate the definitions with the information below.
- Define productivity as a measurement of output compared to the use of an input. Producers desire low costs of production and are interested in increasing the productivity of inputs. An increase in productivity occurs when a given amount of inputs can produce a larger amount of output. There are three methods for increasing productivity: specialization and division of labor, investment in capital resources, and investment in human capital.
- Explain that capital resources are goods produced by other people and used over and over again to produce other goods and services. Capital resources are not consumed today; instead, they are used to produce goods and services in the future. Factories and machines are examples of capital resources.
- Examples of how the use of capital resources increases productivity: an accountant is more productive when given a calculator to complete cumbersome mathematical problems; a vacuum cleaner instead of a broom makes a housekeeper more productive; and a computer instead of a typewriter increases the output of a secretary.
- Explain that investment in capital resources (capital investment) is business purchases of new plant and equipment to be used in the production process.
- Explain that the purchase of a business occurs when the buyer and seller negotiate a price that they both agree upon. The buyer exchanges money and the seller exchanges the product(s), productive resources, and all of the capital resources that are part of the business. The purchase of a business is considered to be a capital investment.
- Describe the production process as the method or procedure used to create a good. It is the method followed to use inputs to create the desired outputs.
- Define technology as the application of knowledge to meet the wants of people.
- Explain that technological change is an advance in knowledge leading to new and improved goods and services and better ways of producing them.
Standard of Living:
- Explain that standard of living is the way people live in an economy in general. It is the measure of how well off people are. The level of income, product variety and choice, employment, and purchasing power all contribute to the measure of standard of living. Standards of living are considered to be raised when people earn more money and have a greater choice of quality products to purchase. A rise in the standard of living can be discussed in terms of benefits to the consumer, producer, and worker.
- Identify a benefit as the reward gained from an action or activity. It is something that is good or helpful.
- Explain that an innovation is a new device, a modified version of an existing device, or a new way of doing something.
- Explain that an invention is something new--something that did not exist before. It is usually the first of its kind.
When the students are satisfied with their definitions have them print out the worksheet.
The students have spent some time investigating the defections of the terms on your worksheet. Now that the students have these definitions they will be able to apply them to the activities in the following lessons.