Factors of Production
Montāžas Teksta
- I 've always wondered how goods get produced in these factories
- Why don't we find out? Let's ask for a tour!
- Thanks for giving us a tour! What exactly goes into producing these products?
- All production starts with land, labor, capital, and entrepreneurship
- Land is all of the natural resources found on Earth.
- That's all correct! and entrepreneurship is the innovation, skill, vision, and creativity required to start a business
- Would examples be minerals, oil, woods and animals?
- Thank you for the tour! Now we both have a better understanding of how the economy works!
- Would that mean capital is the resources made by humans for production?
- Exactly! And labor is time, expertise, and effort that humans put into making all goods and services.
- So financial capital is the money used to buy the goods and services?
- Capital is also divided into three categories: human, physical, and financial
- Yes! Physical capital is the physical resources available to a business
- So that would mean human capital is the experience that result in knowledge or skills to produce goods and services?
- Oh! So entrepreneurs must combine all four factors of production to drive the economy!
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