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    FACTORSOFPRODUCTION

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    The four factors of production are natural resources, capital goods, labor, and entrepreneurship. Natural resources are things provided by nature like land, water, and minerals. Capital goods are human-made resources like factories, machines, and tools used to produce other goods. Labor includes any human effort or work used in production. Entrepreneurship involves combining and organizing the other three factors to actually produce goods and services for a profit.

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    FACTORSOFPRODUCTION

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    dimas
    21 views1 page
    The four factors of production are natural resources, capital goods, labor, and entrepreneurship. Natural resources are things provided by nature like land, water, and minerals. Capital goods are human-made resources like factories, machines, and tools used to produce other goods. Labor includes any human effort or work used in production. Entrepreneurship involves combining and organizing the other three factors to actually produce goods and services for a profit.

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    The four factors of production are natural resources, capital goods, labor, and entrepreneurship. Natural resources are things provided by nature like land, water, and minerals. Capital goods are human-made resources like factories, machines, and tools used to produce other goods. Labor includes any human effort or work used in production. Entrepreneurship involves combining and organizing the other three factors to actually produce goods and services for a profit.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    21 views1 page

    FACTORSOFPRODUCTION

    Uploaded by

    dimas
    The four factors of production are natural resources, capital goods, labor, and entrepreneurship. Natural resources are things provided by nature like land, water, and minerals. Capital goods are human-made resources like factories, machines, and tools used to produce other goods. Labor includes any human effort or work used in production. Entrepreneurship involves combining and organizing the other three factors to actually produce goods and services for a profit.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
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    FACTORS OF PRODUCTION

    The basic resources an economy needs for the production of goods and services are called factors of
    production. Economists usually divide the factors of production into three basic categories: natural resources, capital
    goods, and labor. Many economists add a fourth factor of production-entrepreneurship.
    Natural Resources
    Natural resources are things provided by nature, such as land, air, water, forests, oil, coal, iron ore, and other
    minerals. Natural resources are the starting point of all production. As such they represent the most basic limitation
    on how much any economy can produce. No matter how much labor, capital goods, and technological knowledge an
    economy has, it cannot produce goods without natural resources.
    Capital Goods
    Capital goods are human-made resources used for the production of other goods and services. Factories,
    machines, tools, and office buildings are all examples of capital goods. Such capital goods are necessary for using
    natural resources. For example, sawmills, chain saws, and other capital goods are needed to covert timber into
    usable products.
    Labor
    Labor, which is sometimes called human resources, is any kind of human effort used for production. For
    economists, labor includes not only physical work but also intellectual work and the use of human knowledge,
    talents, and skills. The work of truck drivers, factory workers, lawyers, doctors, and public officials are all example
    of labor. Labor is essential to production because natural resources and capital goods are of no value unless they can
    be put to use by the work of people.
    Entrepreneurship
    Natural resources, capital goods, and labor must be combined and organized before production can take
    place. This process is known as entrepreneurship. An entrepreneur is a person who takes the initiative to bring the
    three factors of production together in order to produce a good or service. He or she provides money, times, and
    effort to buy a raw materials, hire labor, and buy machinery to produce a particular good or service. In return, the
    entrepreneur receives a profit for his or her efforts. The cheaper the cost of producing the good or service, the
    greater the profit.
    (Text from Book of Knowledge, p.57, Exercises by Alip)

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