![]() ![]() The field, the cows, and the milk and beef they produce are all examples of the factor of production known as land.Ĭonsider oil. That requires knowledge we must know how to use the things we find in nature before they become resources. The second is that they can be used for the production of goods and services. The first is that they are found in nature-that no human effort has been used to make or alter them. For this reason, it is helpful to think of "land" as "natural resources." There are two essential characteristics of natural resources. Remember that the factor of production known as land is not just the land itself "land" refers to the items humans get from nature. The entrepreneur is a risk-taker and the creative element that allows a free market economy to evolve as consumer demand changes. It is this person who ultimately tries to combine the factors of production to make a product or provide a service that people want and sell it for a profit. The entrepreneur is the one who believes that he/she has a better idea of how to build “a better mousetrap”. The last factor of production is the entrepreneur, or the person with the idea to create a product or develop a service. Any equipment or items used by a business, to help the business function, is a capital good. Capital is both the result of production (assembly of a bulldozer) and can be used in production (bulldozer used on a construction site). The third factor of production is capital, or capital goods, which are the tools or equipment necessary for production. The labor force may expand or contract over time, or it can evolve with changes to the market, but in the long run it will impact the economy of a country. Labor is performed by people and it is the total amount of talent and effort that a country’s labor force has to create products or services. ![]() Labor is what each person does as part of their livelihood or job to pay for their existence. The concept of land has to do with specific items that humans get from nature, such as natural resources or things that are produced by the land, such as farm products. What goods will be produced? How will they be produced? For whom will they be produced?.What kinds of goods and services are required to meet peoples' needs and wants?.
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