ECONOMIC AGENTS

Probably, you have heard something about "capitalism", maybe you have a few ideas of what it might be. In order we understand how capitalism works, let's talk first about economic agents and factors or production.

Economic agents

According on how they interact, we could classify economic activities in three main agents: 

• People (or labour or consumers): Provide work to companies and State in exchange for a salary, and use their incomes to buy goods, services and pay taxes. 

• Companies: Produce and distribute goods and services for economic benefit. They pay taxes for their profits.

• State: It is supposed to represent the common interests. It develops economic policies (general rules about economic activities) and it can produce and distribute goods and services for the well-being of society. All of this is paid with taxes.

Activities:

1.  Learn and make sentences with the following words: salary, taxes, companies, State. 

2. Explain with your own words the roles of the different agents in a country's economy. 

Factors of production

Watch this video, read the rest of the article and answer: what are the factors involved in economic activity and on what they consist?

The total value of all these factors (land/natural resources, labour, capital and entrepeneurship/technology) makes up the costs of production: 

Activity: If you were the company that produces this corn, how much corn in dollars ($)/acre you should sell if you want to make benefits?