The Foundation of Economics - Part 5 (Factors of Production (which are…
The Foundation of Economics - Part 5
Factors of Production
The limited amount of resources the world possesses
The world can only produce a limited amount of goods and services
Refers to individuals with the following character traits
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.
Able to recognise an opportunity for profit from new inventions
Bearing the uninsurable risks of productions
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
The time and effort involved in and devoted to working on the production of goods and services
Assets created for use in production of other goods, providing humanity with future benefits
Durable and reusable in production process
Used once only, consists of raw materials, semi-finished goods, stocks of finished goods etc.
Human, Financial and Natural capital