1.2.3 Factors of production

Factors of production

Economic resources used to produce goods and services: land, labour, capital, and enterprise.

Role of entrepreneurs

Bring together land, labour, and capital to make a profit by taking risks and innovating.

Capital

Physical goods used in production. Fixed capital: machines and buildings. Working capital: finished or semi-finished consumer goods. Reward: interest.

Entrepreneurship

Managerial ability to organise factors of production, innovate, and take risks. Reward: profit.

Land

Natural resources like oil, coal, wheat, water, or space for fixed capital. Reward: rent.

Labour

Human capital, including managers and employees who work in the economy. Reward: wages.