Unit 1: Factors of Production
example of financial capital
funds the firm(business) used to purchase the physical capitals
example of physical labor
people harvested the wheat, other refined the wheat into flour, someone baked the cake
example of mental labor
someone came up with the recipe for the cake
human resources(labor)
the human effort used to produce goods and services. this can be both physical and mental labor.
Factors of Production
the productive resources used to produce goods and services. stuff you need to make more stuff
Natural resources(land)
the raw materials supplied in nature that are necessary to produce goods and services
How many categories of factors of productions are there and what are they?
there are 4 categories: land(natural resources), labor(human resources), capital(capital resources), and entrepreneurship
Entrepreneurship
ties all the other resources together. the activity of setting up a new business or venture, taking on financial risks in hope of profit
capital resources(capital)
tools, equipment, buildings and other man made resources used to produce a good or service
example of physical capital
tools, machines, buildings, and materials needed to create a product
example of capital resources(capital)
a truck is used to drive ingredients to the bakery, the oven is used to bake the cake, and the bakery building is also a capital resource
example of entrepreneurship
business owners
example of natural resources(land)
cake contains wheat, sugar, eggs, etc which all come from nature