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The Foundation of Economics - Part 5 (Factors of Production (which are…
The Foundation of Economics - Part 5
Factors of Production
which are
The limited amount of resources the world possesses
therefore
The world can only produce a limited amount of goods and services
Entrepreneurs/Management
Refers to individuals with the following character traits
Organisers
Regarded as organisers and decision takers
In charge of deciding what the factors of production will produce, how they are paid, how the product will be marketed etc.
Innovators
Able to recognise an opportunity for profit from new inventions
Risk takers
Bearing the uninsurable risks of productions
Land
Natural Resources (gifts of nature) that are used to produce goods and services. Includes the surface area of Earth, non-renewable resources and renewable resources
Labour
The time and effort involved in and devoted to working on the production of goods and services
Capital
Assets created for use in production of other goods, providing humanity with future benefits
consists of
Fixed/Physical capital
Durable and reusable in production process
Circulating capital
Used once only, consists of raw materials, semi-finished goods, stocks of finished goods etc.
Human, Financial and Natural capital