1.3 - Economic resources

What is a capital good?

A good which is used in the production of other goods or services

What is a consumer good?

A good which is consumed by individuals or households to satisfy their needs or wants

What are factors of production?

Inputs into the production process

What are the four factors of production?

- Land

- Labour

- Capital

- Enterprise

What is land in terms of factors of production?

Natural resources such as oil, coal, wheat, water. It can also be the physical space for fixed capital.

What is the incentive/reward for land?

Rent

What is labour in terms of factors of production?

Human capital, which is the workforce of the economy

What is the reward/incentive for labour?

Wages

What is capital in terms of factors of production?

Physical: goods which can be used in the production process

Fixed: machines and building

Working: finished or semi finished consumer goods

What is the reward/incentive for capital?

Interest from investment

What is enterprise in terms of factors of production?

Managerial ability. The entrepreneur is someone who takes risks, innovates and uses the faceted of production. Resources are drawn together into the product process.

What is the reward/incentive for enterprise?

Profit

How is the environment a scarce resource?

There are only a limited amount of resources on the planet. These are made up of renewable and non renewable resources.

What are renewable resources?

A resource that is replaced naturally and can be used again

What is an example of a renewable resource?

Oxygen

What is a non renewable resource?

A resource that is scarce and runs out as it is used

What is an example of a non renewable resource?

Oil