Economic Resources

  Before we can discuss what choices must be made, we must establish the limits within which our society must operate. What are resources, how do we identify resources, and how do we, as members of society, develop these resources.

      Resources are those inputs that are used in the production of goods and services, for example, cars, TV sets, machines, restaurant meals, etc. Economists usually divide resources into three categories: Land, Labor, and Capital. This division, however, is simply for convenience; most resources appear as combinations of land, labor, and capital. Sometimes, even the services provided by the government are regarded as unique resources. Also, the skill called entrepreneurship, the ability to operate a business and take the risk involved is cited as separated resources. Consider each of these resources separately

            LAND – Refers to all-natural resources which are usable in the productive process. This includes arable land, mineral deposits, forests, and water resources. These resources are “gifts” of nature and come from natural features of our earth and environment.

Such as the oil and gas development of the North Sea in Norway and Britain or the very high productivity of vast areas of farmlands in the United States and Canada. Some other developed countries like Japan have smaller economic resources. Japan is the second-largest economy in the world but is reliant on imported oil.

LABOR – Refers to all physical and mental efforts of a man which can be used to produce goods and services such as teachers, doctors, accountants, nurses, computer programmers, mechanists, and others. Labor receives wages or salaries

The human input in the production or manufacturing process is known as labor. Workers have different work capacities. The work capacity of each worker is based on his own training, education, and work experience.

This work capacity is matters in the size and quality of the workforce. To achieve economic growth the rise in the quality and size of the workforce is very essential.

CAPITAL – Refers to all man-made aids to production. This includes tools, machinery, equipment, buildings, and transportation networks. The term “capital” being defined does not refer to money available for use in the purchase of machinery, equipment, and other production facilities. Because money or financial capital is not considered capital in economic terms. The factor payment for capital is interest income.

In economics, capital is a term that means investment in capital goods. So, that can be used to manufacture other goods and services in future.

Following are the factors of capital:

Fixed Capital

It includes new technologies, factories, buildings, machinery, and other equipment.

Working Capital

It is the stock of finished goods or components or semi-finished goods or components. These goods or components will be utilized in near future.

Capital productivity

New features of capital building, machinery, or technology are commonly used to improve the productivity of the labor. Such as the new ways of farming helps to enhance the productivity of the agriculture sector and give more valuable jobs in this sector which motivates people to come out for work.

Infrastructure

It is a stock of capital that is used to maintain the whole economic system. Such as roads, railway tracks, airports, etc.

ENTREPRENEUR – Refers to a person or persons who set up a firm by combining and organizing properly the 3 basic factors of production such as land, labor, and capital to supply goods and services that he thinks society wants or needs. The entrepreneur hopes to make a profit – normal- profit which is the amount that is left behind after all allocation to the other economic resources have been made.

An Entrepreneur is a person or individual who wants to supply the product to the market, in order to make a profit. Entrepreneurs usually invest their own capital in their business. This financial capital is generally based on their savings and they take risks linked to their investments. This risk-taking can be rewarded by the profit of the business. Entrepreneurship is, thus, an important economic resource.

Following are the factors of Entrepreneurship:

Income

Wealth

Labor and Wages

Capital and Interest

Profit and Enterprise

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