THE FACTORS OFPRODUCTION

What to produce?

There are 4 Factors of Production:

• Land or Natural Resources

• Capital

• Labor

• Entrepreneurship

Land or Natural Resources• Materials that are

NATURALLY MADE and transformed into something else

• Examples:• Oil• Timber• Land• Crops• Natural gas• Milk

2 Types of Natural Resources

• RENEWABLE Can be replaced or

renewed or recycled ex: wood, water, crops

• NON-RENEWABLE Once used, resource is

gone Ex: Oil, Natural Gas, Gold

LABOR• PEOPLE who work to

produce a good or service

• Example: Construction

worker Teacher Line cook

ALWAYS a PERSON!

Types of Labor

• Blue Collar: typically performs “manual” labor (uniform)

• White Collar: typically performs more “business” like labor

• Professional: most advanced type of labor- highest educational degrees.

• Skilled: typically knows a craft

Capital• PHYSICAL• Man-made instruments

that assist in making something else

• Examples: Hammer Robot Book Computer

ALWAYS a THING!

Capital• HUMAN

Investment in knowledge or training for a laborer to become more productive

Examples:• Training programs• Skills development• Advanced degrees

Entrepreneurs• People who RISK time and

money ($) to start their own business and organize the other factors of production.

• Examples: P. Diddy Lemonade Stands Martha Stewart