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Factors of Production

Economics is the science which studies human behaviour as a relationship between ends (wants and needs) and scarce means (resources) which have alternative uses.
Lionel Robbins 1930s

Resources
An economys resources can be classified into land, labour, capital and enterprise. The four factors of production, sometimes called production resources.
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Resources Land(Natural Resources)


Land is defined as all God given resources which contribute to the production process.These are the natural resources available. Examples: land, water, sun, plants, time, air, minerals, oil, etc.
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Resources - Land
The soil for crops, the minerals of the earth, the trees, water for our fish, even the fish themselves.

How do Natural Resources Influence Economic Growth?


Countries that have a lot of natural resources are able to use them to produce goods & services cheaper than a country that has to import natural resources

Resources Labour( Human Capital) Labour is defined as men and womens physical and mental ability which contributes to the production process.

Resources - Labour
The advice of a doctor or lawyer as well as the physical effort of carpenters and a builders labourer are all examples of labour.
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How does Human Capital Influence Economic Growth?

Nations that invest in the health, education & training of their people will have a more valuable workforce that produces more goods & services. People that have training are more likely to contribute to technological advances, which leads to finding better uses of natural resources & producing more goods

Resources - Capital
Capital is defined as the produced means of production.

Resources - Capital
In simple terms capital is used to describe any good which has been produced for the purpose of providing goods and services at a future date.
Examples: tools, equipment, factories, technology, computers, lumber, machinery, etc
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Resources - Capital
A simple fish hook is just as much a capital good as is a giant blast furnace in a steel mill.

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Resources - Capital
It should be acknowledged that capital as referred to by economists, is NOT money or owners investment into the business as it is in accountancy.

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Resources - Capital
The more Capital Goods a country has = the more goods & services they are able to produce .

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Enterprise
Like labour, Enterprise is a human resource, and is often also termed management. Enterprise is defined as the ability to successfully combine land, labour and capital.
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Enterprise
The people who have the ability to combine the other factors of production leading to production are termed entrepreneurs.

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Enterprise
A farmers ability to know when to seed, spray his crop and harvest his crop using the farms capital is an example of enterprise.

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How does Entrepreneurship Influence Economic Growth?


Entrepreneurship creates jobs. Encourages people to take risks, and in doing so, theyve created better healthcare, education, & welfare programs. The more entrepreneurs a country has, the higher the countrys GDP will be

Summary
Economic growth is measured by increases in real capital per GDP over time.To increase economic growth and per capita GDP over time requires investments in both physical capital (factories, machines) and human capital (education, training, skills of labor force).

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