factors of production

“there’s no such thing as a free lunch”

• every choice uses limited resources our economy needs to produce goods and services

  • the production of goods and services is the process that moves the economy forward

    • these limited resources are known as factors of production

    *some say that this is all anyone needs to know about economics, because it costs your or somebody else’s time (labor & efforts —> contribution)

    • not money!

factors of production

• somethings that is used to produce and distribute goods and services

  *time will always be your biggest enemy

  • labor, land, capital, entrepreneurship

goods

• actual product or material that can be obtained in the economy

  *only produced if there is demand

  • something that can be touched; a car, sneakers, food, phones, etc.

services

• work performed by someone

  *producers

  • electrician, auto mechanic, hair stylist, chef, etc.

labor

• people doing work —> human resources (usually described by a job title)

  • they are needed to perform services or create goods by doing jobs

    ex. accountant, ceo, carpenter, police officer, waiter, etc.

land

• limited resources in their natural state

  • includes spaces and things created in nature

    ex. coal, apple, sheep, lake, trees, water, etc.

capital

• something that is used for production

  • anything that helps to increase production (pencils to factories)

• used to make land into goods and services (tree to paper)

  **makes business and economy productive

  ex. headquarter buildings, tractor, tea cups, paper, screwdriver, golf course

entrepreneurship

• people who have taken risks to start new companies and businesses to invent the good or service

  • does this by deciding how they want to combine labor, land, and capital

    ex. bill gates, elon musk, mark zuckerberg, steve jobs, mr. pierre, etc.