They might find pleasure in it, but it's not being used The other option we have is to produce what are known as consumption goods. Tools for other people to use in some other production process. So, that could be that weĪre constructing a factory that itself maybe produces We could be, in that situation,īe producing capital goods. Broadly speaking, weĬould produce something that could be used to produce more things, and we already talk about it. Of things that could be produced from all of theseįactors of production. Finally, I wanna leave on one idea, the idea of the two types Know-how of putting together the other factors of production in order to produce that output. When people are talking about technology as a factor of production, they are really talkingĪbout entrepreneurship. Technology in everyday language, where you think ofĬomputer chips or software. But when you see this, when you see technology as a factor of production, don't think about it as So, sometimes, you'll see theįour factors of production as land, labor, capital,Īnd entrepreneurship and sometimes, you'll see it listed as land, labor, capital, and technology. Is used interchangeably in an economics course, is technology. Produce as much as possible given the other factors that you are putting into the production. Things in a reasonable way? And obviously, you wanna How do you put these things together so that you can produce You can't just randomly build buildings and randomly plant seeds. Entrepreneurship is putting together all of the other factors of production so that you can actually produce things. When someone's an entrepreneur, you might imagine someone who's Entrepreneurship, in our everyday language means putting things together so you're trying to create other things. Things that were produced in order to produce other things. But in an economic context, we are not considering financial assets, we're only thinking about People talk about capital, they'll often include financial capital, financial assets that could be used to get benefit in theįuture, things like money. Now, the place that that'sĭifferent than everyday language, in everyday language, when Some type of machinery there, that is capital for the farm. These were constructed so that they could produce the food from the farm. In this farm example, theĬapital would be the buildings. Putting the coats on after they produce it, that is capital. The whole building itself and all of the light fixturesĪnd all of that as capital. You could view this table and the tools that these folks are It could be a building that you need in order to produce other things.

So, examples of capital would be tools that you use to produce other things.

In an economic context, capital is something produced to Slightly more specific when we talk about it It means one thing in everyday language, and it means something You see people putting in work in order to produce the So, someone had to plant these seeds, and they will have to harvest these crops. Now, another importantįactor of production, and arguably they're all So, in some contexts, instead of land, some people might say natural resources for this first factor of production. It can mean natural resources in general. And land doesn't just have to strictly mean land in an economics context. Maybe a hundred years ago, even there, they needed land Even in a garmentįactory, this is a picture of a garment factory from And you can see that in this example here, where we see a farm. Of course, if you need to build factory or if you need to farm, And so, some of it might jump out at you. Groups, as either land, labor, capital, or entrepreneurship. But the idea of the fourįactors of production is that these things can all be classified in one of these four To work in the factory, you need all of these different things. You might need a factory, you might need people Is the production process, and this arrow is the Want to produce anything, so let's just say this circle Usually listed as land, labor, capital, and entrepreneurship. The idea of the four factors of production, which are That will keep coming up as you study economics is

Four factors of production land