The Factors of Production
The factors of production are the scarce resources an economy has available to produce goods and services. Economists group the factors of production into four primary categories: land, capital, labor, and entrepreneurs.
Land
Normally, land means the surface of earth. But in economics, land represents all natural resources found both above and below the surface of the earth that are used to produce goods and services. These resources include mineral resources, rocks, ground water, rain, air, and even space!
Capital
Capital includes the equipment, tools, and technology used to convert natural resources to finished goods, or to provide services. Examples of capital are factories, tractors, and hammers.
Labor
In economics, labor is any physical or mental work performed by humans to produce goods and services. Factory workers, mechanics, farmers, airline pilots, accountants, and school teachers are all part of the economy's labor.
Entrepreneur
Land, labor, and capital are scattered at different places and must be organized together in order to produce goods and services. This work is done by an entrepreneur. Entrepreneurs are individuals who start new businesses and introduce new products.
