Which Factors Of Production Are Used By A Landscaping Service To Provide Economic Value?

Learning Outcomes

• List the four factors of production
• Explain the iv factors of production

Introduction

All businesses, both for-profit and nonprofit, demand resources in order to operate. Simply put, resources are the inputs used to produce outputs (appurtenances and/or services). Resources are likewise called factors of production. What makes something a resource? For i affair, it needs to exist productive.

The post-obit video volition give you an overview of what economists mean when they talk about resource or factors of product.

There are 4 categories of resources, or factors of product:

• Natural resources (land)
  
• Labor  (human capital)
• Capital (mechanism, factories, equipment)
• Entrepreneurship
  

Natural Resource

Natural resources have two central characteristics: (1) They are establish in nature, and (2) they can be used for the production of appurtenances and services. In order to provide benefit, people first have to observe them and then effigy out how to utilise them in the the production of a adept or service. Examples of natural resources are country, copse, wind, water, and minerals.

A key feature of natural resources is that people tin't make them. They also tend to exist limited. New natural resource—or new means of extracting them (such every bit fracking, for example)—can be discovered, though. These natural resources can be renewable, such every bit forests, or nonrenewable, such equally oil or natural gas. It's too possible to invent new uses for natural resources (using air current to generate electricity, for example). Resource that are cultivated or made with human effort can't be considered natural resources, which is why crops aren't natural resources.

Labor

Labor refers to homo resources (also called man upper-case letter)—physical or intellectual. You're adding to your own human resources right now past learning. Y'all may possess certain human being resources already—maybe you have an athletic gift that enables you to play professional ball to earn a living, for example—but you can besides develop them through job training, educational activity, experience, and so on.

The word labor often calls to mind physical labor—working in a factory or field, amalgam a edifice, waiting tables in a restaurant—but information technology tin can refer to whatsoever human input (paid or unpaid) involved in the production of a adept or service. This broader definition of labor is particularly important in today's technology-driven business environment, which has come to rely much more on the intellectual contributions of the labor force than the physical labor required of, say, working in a production line. Intellectual contributions include feel in and out of school, training, skills, and natural abilities. In order to remain competitive, businesses place a premium on employees who bring these "soft skills" to the tabular array. Many of the advances in our world today are the outcome of the application of intellectual man resources.

Finally, labor brings creativity and innovation to businesses. Businesses use homo creativity to accost changes in consumer preferences and to invent goods and services that consumers haven't fifty-fifty imagined yet. Without creativity, innovation would stall, and economies would stagnate.

Capital

Earlier we hash out capital letter, it'due south important to point out that coin is Non a resources. Remember that resources need to be productive. They accept to be used to brand something else, and money can't do that. Money certainly helps the economy move along more than efficiently and smoothly, similar grease for the economic car. But in and of itself, it can't produce annihilation. It'south used to acquire the productive resources that can produce goods and services. This defoliation is understandable, given that businesspeople frequently talk well-nigh "financial upper-case letter," or "investment capital," which does hateful coin.

In contrast to natural resources, capital letter is a resource that has been produced but is too used to produce other goods and services. This factor of production includes machinery, tools, equipment, buildings, and technology. Businesses must constantly upgrade their capital to maintain a competitive edge and operate efficiently. In the last couple decades or then, businesses take faced unprecedented technological alter and take had to meet the demands of consumers whose lives increasingly take place in a virtual world. Almost every business has a Web presence, and many customers are more than accustomed to interacting with a virtual version of the concern than a brick and mortar store.

Entrepreneurship

Thus far we take looked at natural resources, human being resources, and capital as three inputs needed to create outputs. The last one we need to consider is maybe the most of import: entrepreneurship. This resource is a special form of labor provided by an entrepreneur. An entrepreneur is someone who is willing to risk his or her time and coin to start or run a business organisation—usually with the hope of earning a profit in return. Entrepreneurs have the ability to organize the other factors of production and transform them into a business. Without entrepreneurship many of the goods and services we swallow today would non be.

Allow'southward render to the example given at the showtime of this section: baking a cake.

Factor of Production
Natural Resource	Air current is harnessed to produce electricity that powers the electrical mixer and oven.
Human being Resource	The baker's labor combined with the creativity and skills needed to actually bake and decorate it
Capital letter	Ovens, cake pans, flour, carbohydrate, butter, and other ingredients used to make the cake
Entrepreneurship	An private who starts the bakery or runs a domicile-based business baking and selling cakes to customers

If you lot consider merely some of the factors of product involved in baking even a very simple block, what would happen if i of the four inputs were missing? What if y'all lacked electricity or an oven? What if you lacked the skills to bake or decorate the cake? What if yous had the commencement three factors of product simply not the fourth, entrepreneurship? You tin surmise that all 4 factors of product are required to create the outputs that would go y'all into the cake business—or any business.

Check Your Agreement

Answer the question(due south) below to run across how well you understand the topics covered in a higher place. This short quiz does not count toward your grade in the class, and you can retake information technology an unlimited number of times.

Apply this quiz to cheque your agreement and determine whether to (ane) study the previous section farther or (2) move on to the next section.

Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/factors-of-production-2/

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