What Resources Do I Have?

Keystone Principle #8 – Quantity and Quality of Resources Impact Living Standards

Voluntary National Content Standards: #3, #13, #15


At the most basic level, the standard of living we enjoy depends on the “stuff” that is available to us for consumption. And availability of “stuff” is not equated with what is on display in the largest stores; rather it translates to what we actually consume. (Just like demand is measured not by wants, but what we are willing and able to purchase.) And the “stuff” we can consume is at least partially dependent on the resources – the capital resources, human resources, natural resources and entrepreneurship – available for productive uses.

Capital resources (tools, technology, or financial assets) have the ability to multiply our abilities.  This makes us more productive, allowing us to produce more with less which drives down cost and price.

Human resources (our mental and physical efforts) are the human element in any productive activity.  Whether we are the “brains” or the “hands” that make something work, value is added. This value can be multiplied, but only to the extent that workers command the necessary skills. These resources are improved through formal education and other skill-building, which are themselves improved by providing incentives or returns to skill. By staying in school, students build skills that they can market. But once they have a job, they need to continue building skills (either through schooling or on-the-job opportunities).  Developing new skills allows workers to get better jobs.

Natural resources (plants, animals and minerals that occur naturally) are the raw materials upon which we use our labor, multiplied by capital to produce the goods and services (final or intermediate) that satisfy wants. Oddly enough, many people feel this is most important, yet many resource nations poor in natural resources have succeed.  Rather it is the ability to access resources and use them wisely that is valuable.  Efforts to access alternative energy resources and to conserve existing energy resources are both examples of wisely using available natural resources.

Entrepreneurship is a special resource.  It is the idea that brings the other three factors of production together in a productive form.  Entrepreneurship should not be confused with management. It is vision combined with risk-taking. The economist, Joseph Schumpeter, identified five types of entrepreneurship:

  1. introduction of a new product,
  2. introduction of a new method of production,
  3. opening a new market,
  4. discovery of a new source of supply,
  5. different organization of an industry.

All of these types of entrepreneurship depend upon certain characteristics, not one of which is sufficient to be an entrepreneur. Characteristics of successful entrepreneurs include, but are not limited to:

  1. The ability to see a possibility – specifically to think about and recognize one of the five situations as Schumpeter described them.  However, seeing the possibility is not enough.  If it were, engineers and inventors would be entrepreneurs.  But, most of them are not.
  2. The willingness to take a risk. This is why many engineers and inventors are not entrepreneurs. It’s not that they don’t like risk.  But that they prefer the creative aspect.  Risk means there’s potential failure as well as potential reward.  Assessing the risk and acting on it is a different skill from innovation.
  3. The ability to organize other factors to bring the idea to production. Knowing what is available, how it can be organized or re-organized, and how to bring the idea from the design stage to the customer is different from managing operations.  It is the ability to see an entire picture and process and know what to do next.

Entrepreneurship is encouraged by providing incentives to promote the formation and growth of new enterprises. The student who has or can develop these characteristics has the potential to be an entrepreneur.


I. Understanding

  • Students will realize that their standard of living is determined, in large part, by the skills they have in the marketplace.
  • Students will see the connection between the quantity and quality of productive resources a nation has, and the general standard of living enjoyed by its citizens.
  • Students will understand the types of entrepreneurial activity.
  • Students will understand some of the skills of successful entrepreneurs.

II. Skills

Students will be able to:

  • Describe standard of living.
  • Explain how the quantity and quality of productive resources are important.
  • Identify types of entrepreneurial activity.
  • List and explain characteristics of entrepreneurs.


I. Concept Vocabulary

  • Capital Resources– Resources made and used to produce and distribute goods and services; examples include tools, machinery and buildings. Also known as equipment.
  • Entrepreneurship – A characteristic of people who assume the risk of organizing productive resources to produce goods and services; a resource.
  • Factors of Production – Productive resources; what is required to produce the goods and services that people want; natural resources, human resources, capital resources and entrepreneurship.
  • Human Resources – The health, education, experience, training, skills and values of people. Also known as human capital or labor.
  • Natural Resources – “Gifts of nature” that can be used to produce goods and services; for example, oceans, air, mineral deposits, virgin forests and actual fields of land. When investments are made to improve fields of land or other natural resources, those resources become, in part, capital resources.  Also sometimes referred to as land.

II. Journals

Initial Prompt (to be done during the introduction of this monthly theme/principle):

  • Explain how each (or any one) of the productive resources can improve living standards if the quantity is increased? Are there limits to this? Why or why not?

General assignment:

Choose one or two of the quotations below and write a journal entry of at least half a page.

  1. Restate the idea in your own words
  2. Say whether or not you agree with the statement,
  3. Explain why you agree or disagree
  4. Discuss how you have seen it expressed in your own life.

III. Quotations:

  1. “What’s right about America is that although we have a mess of problems, we have great capacity – intellect and resources – to do something about them.”  Henry Ford II
  2. “Innovation is the specific instrument of entrepreneurship…the act that endows resources with a new capacity to create wealth.”  Peter Drucker
  3. “The opening of a foreign trade, by making them acquainted with new objects, or tempting them by the easier acquisition of things which they had not previously thought attainable, sometimes works a sort of industrial revolution in a country whose resources were previously undeveloped for want of energy and ambition in the people: inducing those who were satisfied with scanty comforts and little work, to work harder for the gratification of their new tastes, and even to save, and accumulate capital, for the still more complete satisfaction of those tastes at a future time.” – John Stuart Mill
  4. “If a man has the right to self-ownership, to the control of his life, then in the real world he must also have the right to sustain his life by grappling with and transforming resources; he must be able to own the ground and the resources on which he stands and which he must use. In short, to sustain his “human right”—or his property rights in his own person—he must also have the property right in the material world, in the objects which he produces.” – Murray N. Rothbard
  5. “Most people live, whether physically, intellectually or morally, in a very restricted circle of their potential being. They make use of a very small portion of their possible consciousness, and of their soul’s resources in general, much like a man who, out of his whole bodily organism, should get into a habit of using and moving only his little finger. Great emergencies and crises show us how much greater our vital resources are than we had supposed.” – Henry James
  6. “A successful society is characterized by a rising living standard for its population, increasing investment in factories and basic infrastructure, and the generation of additional surplus, which is invested in generating new discoveries in science and technology.” – Robert Trout
  7. “The destiny of world civilization depends upon providing a decent standard of living for all mankind.” – Norman Borlaug
  8. “If workmen are denied any increase in real wages and they can look forward only to a better standard of living through reduction of prices, progress for them is terribly slow, and they become impatient and dissatisfied.” – Charles E. Wilson


The Rich Nation’s Mystery (an EconEdLink online lesson)

Which “Wood” You Choose? (an EconEdLink online lesson)

If You’re So Smart, Why Aren’t You “Rich”? (an EconEdLink online lesson)

The Entrepreneur in You (an EconEdLink online lesson)

A Fair Wage (an EconEdLink online lesson)

The American Standard of Living (an EconEdLink online lesson)

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