Factors of Production

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The Four Factors of Production in Economics By Mark Kennan, eHow Contributor Economic resources are scarce relative to the infinite needs and wants of people and businesses operating in the economy. It is important to use these resources efficiently in order to maximise the output that can be produced from them. Economists make a distinction between three types of resources - land, labour and capital. A tractor is an example of capital. One topic of study in economics is how and why different amounts of different goods are produced in an economy. Economists who study why one area produces more lumber while another produces computers, or why one country has more small businesses while another has only state-run corporations, will look at the four factors of production to help guide their inquiry. The four factors of production in economics are land, labor, capital and entrepreneurship. Other People Are Reading * 4 Factors of the Production of Economic Resources * Most Important Factor in Managerial Economics * * * * Print this article 1. Land * Land refers to the natural resources that are available and used in the production of goods. For example, a heavy mining industry could not exist without the natural deposits of valuable minerals in the ground, while a thriving farming community would have a hard time surviving with poor soil and no rainfall. Labor * Labor refers to the human inputs of work to produce the goods and services. For example, the training required for employees to successfully operate machines to produce cars would be considered as part of labor. In addition, the mental capacity to perform tasks and invent new products is also part of labor. The only human element not included in labor is entrepreneurship. * Sponsored Links * Production Machinery Search Largest China

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