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