Factors of Production

1. Economic Resources
(Factors of Production)

2. Natural Resources
• Materials that come from the:
– Earth
– Water
– Air
• Examples: iron ore, gold, oil, trees, wildlife,
oxygen, etc
• These resources are limited and most are non-
renewable

3. Capital Resources
• Equipment and money used for business
purposes
• Examples: buildings, tools, trucks, factories,
money spent on acquiring these things
• Capital resources usually last for a long time

4. Human Resources
Also called “Labour”
The people who work to create the goods and
services
Examples: farmers, factory workers,
construction workers, website designers,
nurses, doctors, teachers, pilots, etc
Includes both physical and mental labour

5. Economists classify RESOURCES or factors
of production in 4 categories
1. Land
2. Labor
3. Capital
4. Entrepreneurship

6. Entrepreneurship
• The special talent some people have for
searching out and developing new ideas
• The special talent for developing new
products and new ways of doing things.
But how is an entrepreneur different from an inventor?

7. Monetary payments to
Resources:
1. Land Rent
2. Labor Wages
3. Capital Interest
4. Entrepreneurship Profit

8. Price = the sum of the monetary
payments to resources