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Factors of Production
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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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