RESOURCES

Economic resources, often called factors of production, are divided into four general categories. They are land, labour (sometimes referred to as human resources), capital, and entrepreneurship.

Land.Land describes the ground that might be used to build a structure such as a factory, school, home, or church, but it means much more than that. Landis also the term used for the resources that come from the land. Trees are produced by the land and are used for paper, furniture and numerous other products, so they are referred to as land. Minerals that come from the ground, such as oil that is used to make gasoline, or gold that is used to make jewelry, or wheat that is grown on the land and is used in the production of bread and other products, or sheep that are raised for the wool they produce that is used to make sweaters are all described as land.

Labour (Human Resources).Labour is the general category of the human effort that is used for the production of goods and services. This includes physical labour, such as harvesting trees for lumber, drilling for oil or mining for gold, growing wheat for bread, or raising the sheep that produce wool for a sweater. In addition to physical labour, there is mental labour, which is necessary for such activities as planning the best ways to harvest trees and making decisions about which trees to harvest. Labour is also involved when a doctor or surgeon analyzes and diagnoses (mental labour) before performing a medical procedure, then performs the procedure (physical labour).

Capital.Capital is input that is often viewed in two ways. Capital might be viewed as human capital – the knowledge, skills, and attitudes that humans possess that allow them to produce. The other type of capital is physical capital, which includes buildings, machinery, tools, and other items that are used to produce goods and service. Traditionally, physical capital has been a prerequisite for human capital; however, because of rapid changes in technology, today human capital is less dependent on physical capital.

Entrepreneurship.One special form of human capital that is important in an economic environment is entrepreneurship (often thought of as the fourth factor of production). Entrepreneurial abilities are needed to improve what we have and to create new goods and services. An entrepreneur is the one who brings together all the resources of land, labour, and capital that are needed to produce a better product or service. In the process of doing this, the entrepreneur is willing to assume the risk of success and failure.

Many people associate entrepreneurship with creating or owning a new business. That is one definition of entrepreneurship but not the only one. An entrepreneur might create a new market for something that already exists or push the use of a natural resource to new limits in order to maximize efficiency and minimize consumption.