Economic Resources

Economic Resources

1. FACTORS OF PRODUCTION

   • 1. LAND
     • the natural resources we take from the world
     • Examples: fish, forestry, air, minerals, land
     • reward= RENT
   • 2. LABOUR
     • All the potential work force including the physical people and their skills, ability and intelligence
     • reward= WAGES
   • 3. CAPITAL
     • The stock of goods used to make other goods and services (capital goods)
     • Examples: machines, tools, computers, roads, railways, buildings
     • Reward= INTEREST
   • 4. ENTERPRISE
     • Risk takers who are prepared to work to bring factors 1-3 together to make goods and services
     • (business manager, entrepreneur)
     • reward= PROFIT

2. free good= goods with no opportunity cost, they are free, e.g. air, education

3. Economic good= goods that are scarce and therefore have an opportunity cost, e.g. oil, food, clothes