There are four categories of resources, or factors of production: Natural resources (land) Labor (human capital) Capital (machinery, factories, equipment) Entrepreneurship. To sum up, factors of production are the four types of inputs or resources necessary for the production process – transforming inputs (raw materials, components, machinery, equipment and labor) into outputs (manufactured goods or provided services). The following video will give you an overview of what economists mean when they talk about resources or factors of production. Should it be considered as one of the factors of production? If a business fails, entrepreneurs may lose some or all of their money and time invested in businesses. Entrepreneurs are ready to take the risk of setting up businesses. The success or failure of a business rest on the talents and decisions of the entrepreneur. Entrepreneurship is the management, organization and planning of the other factors of production – the skill of combining together all available resources at a given period of time. Entrepreneurship / EnterpriseĮntrepreneur develops a business idea, hires and organizes the other three factors of production to carry out the business activity. leasing a machine, renting an office space or a factory building, etc. Owners of capital receive interest, if others borrow it from them, e.g. Second, capital is also finance needed for production of goods and services. tools, machinery, buildings, offices, factories, computers, equipment, vehicles, etc. First, it is all non-natural, artificial (manufactured) resources used in the production of other products, e.g. The term ‘capital’ has several meanings in business. Labor is also considered as the number of people available to work. Quality of personnel is usually achieved through training and education. Each worker possesses unique knowledge, personality, skills and experience. Workforce is paid salaries (full-time workers earning salaries are considered as Fixed Cost) or wages (part-time workers earning wages are considered as Variable Cost) for their services in a business. Labor is also called workforce or personnel. Manual and skilled labor make up workforce of the business. Laborīoth the physical and mental efforts of people in the production of a good or service. wood, water, rivers, fish and seafood, diamonds, hydrogen, crude oil, minerals, metal ores, forests and physical land itself (fertile soil). Land includes all natural renewable and non-renewable resources used for production, e.g. There are four factors of production available to enterprises: land, labor, capital and enterprise. The resources used in the production processes are called factors of production. FINAL ACCOUNTS – PROFIT AND LOSS ACCOUNTīusinesses require resources for the production of goods and services.DIFFERENT TYPES OF BUSINESS ORGANIZATIONS.
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