The natural resources and materials of the land become the goods produced. LandLand is the naturally occurring materials of the planet that are used for the production of goods and services, including the land itself the minerals and nutrients in the ground the water, wildlife, and vegetation on the surface and the air above. While a covey of construction workers might be able to fabricate a four-bedroom house with nothing but bare hands, an assortment of hammers, saws, and other tools is bound to make their work easier and more productive. Without capital, labor would do ALL production "by hand." The key role of capital in the production process is to make labor more productive. This factor must be produced using other factors of production, which means that society is often faced with the choice between producing consumption goods that satisfy wants and needs and capital goods that are used for future production. Capital is the produced factor of production. CapitalCapital is the manufactured, artificial, or synthetic goods used in the production of other goods, including machinery, equipment, tools, buildings, and vehicles. Labor includes both the physical effort of factory workers and farmhands often associated with labor, as well as the mental effort of executives and supervisors. LaborLabor is the mental and physical efforts of humans (excluding entrepreneurial organization) used for the production of goods and services. Let's get specific and formal for each of the four resource categories. This is the person, Clint Cobblemeyer, who makes the decision to build the house in the first place and then brings together the materials, workers, and tools needed to get the job done. This includes lumber, nails, screws, concrete, paint, roofing shingles, carpet, wallboard, bricks, and everything else that becomes the house. This includes hammers, electric saws, screw drivers, delivery trucks, scaffolding, paint brushes, shovels, and other equipment. This includes the carpenters, electricians, concrete workers, plumbers, roofers, painters, and everyone else who hammers, saws, welds, digs, and performs the assorted tasks need in the construction process.
To see these inputs, consider a house being built by the Clint Cobblemeyer Construction Company. The production of any good or service inevitably requires four types of inputs. And entrepreneurship organizes the entire process. Capital is the tools that makes the job easier. Land provides the basic raw materials that become the goods. All four factors of production categories are important to the production of goods used in the wants-and-needs-satisfying process that keeps human beings alive from one day to the next and makes living just a little more enjoyable. Factors of production are also termed resources or scarce resources. However, they are also an entry barrier and lead to market control.įACTORS OF PRODUCTION: Labor, capital, land, and entrepreneurship used by society to produce consumer satisfying goods and services. Patents are designed to encourage inventions and other developments that promote technological advances. A patent gives the owner the exclusive rights to sell, market, license, or otherwise generate revenue from an invention, innovation, or production technique. PATENT: The guaranteed ownership and control of an invention, innovation, or production technique by government for a period of time (currently 17 years). AmosWEB means Economics with a Touch of Whimsy!
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