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Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
Edition 2ISBN: 978-0077416409Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
Edition 2ISBN: 978-0077416409 Exercise 1
What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?
Explanation
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Economic resources include all natural, human, and manufactured resources, which are used in the production of goods and services.
Economists classify economic resources as:
• Land,
• Labor,
• Capital and
• Entrepreneurial ability
The diagram below depicts the categories of resources:
Land : Land is any natural resource gifted by nature. It includes forests, minerals, water, oil, coal, wind, and ocean.
Labor : Labor is the mental and physical capacity of workers to produce goods and services.
Capital : Capital is physical plants, machinery, and equipment used to produce other goods. Capital goods do not directly satisfy human wants, they support the production of consumer goods.
Entrepreneurship : Entrepreneurship is a special type of labor. It is the creative ability of individuals in combining resources to produce innovative products.
The production of everything takes place by using one of these resources or combinations of them.
The resources are also called as factors of production or inputs because they are combined together to produce goods and services.
Economists classify economic resources as:
• Land,
• Labor,
• Capital and
• Entrepreneurial ability
The diagram below depicts the categories of resources:
Land : Land is any natural resource gifted by nature. It includes forests, minerals, water, oil, coal, wind, and ocean. Labor : Labor is the mental and physical capacity of workers to produce goods and services.
Capital : Capital is physical plants, machinery, and equipment used to produce other goods. Capital goods do not directly satisfy human wants, they support the production of consumer goods.
Entrepreneurship : Entrepreneurship is a special type of labor. It is the creative ability of individuals in combining resources to produce innovative products.
The production of everything takes place by using one of these resources or combinations of them.
The resources are also called as factors of production or inputs because they are combined together to produce goods and services.
Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
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