FACTORS OF PRODUCTION

ALSO KNOWN AS “INPUTS”

LAND – ALL NATURAL RESOURCES OR “GIFTS OF NATURE”

INCLUDES REAL ESTATE AND METALS / MINERALSFIXED (THERE IS ONLY SO MUCH)COUNTS ABOVE AND BELOW GROUND AS WELL

LABOR – PHYSICAL + MENTAL EXERTION OF PEOPLE ENGAGED IN PRODUCTION OF GOODS + SERVICES

CONDITIONS…NOT SLAVERY OR COERCIVE

– MUST BE ABLE TO DETERMINE PRICE OF SALE OF LABOR

WHAT ABOUT…?PRISON LABORANIMAL LABOR

CAPITAL– ALL MANUFACTURED GOODS USED TO PRODUCE GOODS AND SERVICES.

Ex.) MACHINERY, FACTORIES, STORAGE, TRANSPORT

NOT MONEY – MONEY IS NOT A RESOURCE, AS IT DOESN’T PRODUCE ANYTHING - IT IS A MEANS OF EXCHANGE

INVESTMENT CAN BE DEFINED AS THE PURCHASE OF CAPITAL GOODS

HUMAN CAPITAL – INCLUDES SPECIALIZED SKILLS OR EDUCATION

ENTREPRENEURIAL ABILITY – PERSON WHO ASSUMES RISKS AND UNKNOWNS OF A BUSINESS

COMBINES LAND, LABOR, CAPITAL TO CREATE A SUCCESSFUL BUSINESS VENTURE

REMEMBERING THE FOUR FACTORS OF PRODUCTION IS A MUST.SO SAY IT WITH ME…

LAND LABOR CAPITAL ENTREPRENEURSHIP

CIRCULAR FLOW MODEL