Factors of production
Introduced| English | Meaning |
|---|---|
| factors of production/ˈfæktəz ɒv prəˈdʌkʃn/ | The inputs used to produce goods and services: land, labour, capital and enterprise. |
| land/lænd/ | Natural resources used in production, including the ground, water, minerals and other resources supplied by nature. |
| labour/ˈleɪbə/ | Human physical and mental effort used in production. |
| capital/ˈkæpɪtl/ | Produced assets used to make other goods and services. |
| enterprise/ˈentəpraɪz/ | The ability and willingness to organise production, innovate and bear business risk. |
| risk/rɪsk/ | The possibility of an adverse outcome, often assessed using its likelihood and consequences. |
| human capital/ˈhjuːmən ˈkæpɪtl/ | The knowledge, skills, experience and health that contribute to people's productive ability. |
The four ingredients of everything
- A pizza needs a field of wheat, a baker, an oven, and someone who decided to open the shop.
- Economists sort every resource into just four factors of production 生产要素, each earning its own reward.
Factors of production lab
Sort real resources by the factor of production they represent.
The four factors
Land — natural resources such as farmland — is one of the four factors of production
Match each factor of production to its reward.
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Land-rent, labour-wages, capital-interest, enterprise-profit.
A tractor used on a farm is an example of:
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A tractor is a man-made aid to production — capital.
The entrepreneur
- Enterprise combines land, labour and capital, takes the risk, and earns the profit (or bears the loss).
- Without it, the other three factors sit unused.
The entrepreneur takes the risk and combines the other factors of production.
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Enterprise organises land, labour and capital and bears the risk for profit.
Improving the factors
- More or better factors raise what an economy can produce.
- Education improves labour (human capital 人力资本); investment adds capital; new resources add land.
"Capital" means tools, not money. In economics, capital is machines, factories and equipment — not cash. Money just buys the capital.
The four factors of production and the reward each one earns: land–rent, labour–wages, capital–interest, enterprise–profit
In economics, capital means:
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Capital is man-made aids to production, not money.
Education and training that make workers more productive improve human ______.
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Human capital is the skills embodied in labour.
You've got it
- four factors: land (rent), labour (wages), capital (interest), enterprise (profit)
- the entrepreneur combines the others and takes the risk for profit
- capital = man-made aids (tools/machines), not money