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Intro terminology
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The four
Factors Of
Production“L.L.C.E.”
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Resources fall into 4 categories
• Land
• Labor
• Capital
• Entrepreneurship
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LAND – physical space
• Natural resources– Renewable and Non-renewable
• To provide food, clothing, shelter
• 1. Apple orchard
• 2. city lot, gasoline
• 3. city lot
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Labor
• Human sweat and skill
• 1. Apple pickers’ time
• 2. gas station attendant’s time
• 3. computer programmer’s time
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Capital
• The equipment and structures used to produce goods and services
• Goods produced in the past, being used in the present, to produce new goods and services
• 1. Ladders, baskets, trucks: bag of apples
• 2. Gas station, pumps, lifts: full tank
• 3. Office building, computers: new software
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Entrepreneurship
• The process of bringing together the three factors of production (L, L, C)
• A risk taker
• Inventor, innovator, organizer– Introduces new or improved
• Products, • techniques, • management
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GOODS AND SERVICES
BUSINESS FIRMSSELL FINISHED
GOODS AND SERVICES
TO HOUSEHOLDS
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Goods
– products or commodities,• Physical or tangible
• A SCISSORS
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Services
– actions or activities• INTANGIBLE GOODS• Provided, Cannot be resold
• A HAIRCUT