Intro terminology

The four

Factors Of

Production“L.L.C.E.”

Resources fall into 4 categories

• Land

• Labor

• Capital

• Entrepreneurship

LAND – physical space

• Natural resources– Renewable and Non-renewable

• To provide food, clothing, shelter

• 1. Apple orchard

• 2. city lot, gasoline

• 3. city lot

Labor

• Human sweat and skill

• 1. Apple pickers’ time

• 2. gas station attendant’s time

• 3. computer programmer’s time

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

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

GOODS AND SERVICES

BUSINESS FIRMSSELL FINISHED

GOODS AND SERVICES

TO HOUSEHOLDS

Goods

– products or commodities,• Physical or tangible

• A SCISSORS

Services

– actions or activities• INTANGIBLE GOODS• Provided, Cannot be resold

• A HAIRCUT