Assignment 8: Factors of Production Vocabulary Terms
Land: The resource that encompasses the natural resources used in production. Also, land is one of the three factors of production; land, labour, and capital. https://www.britannica.com/topic/land-economics
Example: Land is what we see everywhere around us and can be described as a location where there are natural resources. For example, the land in Alberta is famous for their natural gasses encompanying oil, an important resource that is well sought out for.
Capital: One of the four factors of production. Capital is used to describe financial assets or their financial value. https://www.investopedia.com/terms/c/capital.asp
Example: Capital includes tangible objects such as automobiles or buildings, patents and brand names. Each of these are tangibles assets which can be used to describe one’s financial value.
Labour: The amount of physical, mental and social effort used to produce goods and services in an economy. It includes the expertise, manpower, and service needed to turn raw materials into finished products and services. https://www.thebalance.com/labor-definition-types-and-how-it-affects-the-economy-3305859
Example: There are many examples that can be used to describe what labour means for it is the energy put into something to create a finished product. A good example is how we use machinery as a source of labour to produce many of our products today.
Wealth: Wealth measures the value of all the assets of worth owned by a person, community, company or country. Thus, wealth is simply the accumulation of resources. https://www.investopedia.com/terms/w/wealth.asp#ix 5TXt40AIr
Example: If I were to measure my own wealth, it would be by adding all my assets together, which would primarily include my laptop, my phone, my debit card, and my cash, and then subtracting my debts. Therefore, the overall number I reach will be exemplify my overall wealth.
Capital Goods: Tangible assets that a business uses to produce goods or services that are used as inputs for other businesses to produce consumer goods. https://www.investopedia.com/terms/c/capitalgoods.asp#ixzz5TXtFEQEL
Example: Capital goods include items such as, buildings, machinery, equipment, vehicles and tools. These are all considered to be capital goods because they are tangible assets that can be used to for businesses to produce consumer goods.
Consumer Goods: Any tangible commodity produced and subsequently purchased to satisfy the current wants and perceived needs of the buyer. https://www.britannica.com/topic/consumer-good
Example: Consumer goods include many things such as, clothing, food, and jewelry. These are all included as part of consumer goods because they are all the ends result of production.
Need: Goods or services that are required. Needs are objects or things that we need to be able to survive. http://www.mcwdn.org/ECONOMICS/NeedWant.html
Example: Needs are what is considered something that all human desire to survive. This includes a home, water, food, clothing, and health care.
Want: Goods or services that are not necessary but that we desire or wish for. http://www.mcwdn.org/ECONOMICS/NeedWant.html
Example: An example of wants include a new phone, a TV, a mansion. These are all things that people can live without, but are desired by many. http://www.mcwdn.org/ECONOMICS/NeedWant.html
Economics: A social science concerned with the production, distribution and consumption of goods and services. It studies the way individuals, businesses, governments and nations make choices on allocating resources to satisfy their wants and needs, https://www.investopedia.com/terms/e/economics.asp#ix 5Th TBc 9Jz
Example: Economics include the manufacturing, distribution, and consumption of goods. Every country has a different economic system that they see fit best. For example, in Canada, we have a mixed economy.
Goods: Materials that satisfy human wants and provide utility. They include anything tangible that can have an effect on one’s daily life. https://en.wikipedia.org/wiki/Goods
Example: Goods can include anything from foods, toys, clothing, and etc. As long as it is tangible and desired by humans, we can define that item part of goods.
Services: A type of economic activity that is intangible, it is not stored and does not result in ownership. A service is consumed at the point of sale. http://www.investorwords.com/6664/service.html
Example: Services can include haircuts, mail delivery, and car repair. These are all considered services because they are all known as economic activity that is intangible.
Scarcity: A condition where there are limited resources. In other words, society does not have sufficient resources to produce enough to fulfill subjective wants. https://www.econlib.org/library/Topics/HighSchool/Scarcity.html
Example: An example of scarcity can be the high demand for gas in B.C. This high demand is due to the amount of people with cars, and how scarce it is getting.
Shortage: A shortage is a situation in which demand for a good or service exceeds the available supply. Possible causes of a shortage include miscalculation of demand by a company producing a good or service, resulting in the inability to keep up with demand, or government policies such as price fixing or rationing. https://www.investopedia.com/terms/s/shortage.asp#ix 5Tw U9R1
Example: An example of shortage can be if a company sells a certain product, jeans, for example, at a low price of $20. Due to the price, the high demand will cause people to buy it all, which will cause a shortage of product.
Factors of Production: Factors of production is described as the inputs that are used in the production of goods or services in order to make an economic profit. https://www.investopedia.com/terms/f/factors-production.asp#ix 5Tw oXB
Example: The factors of production include land, labour, capital, and entrepreneurship. When starting a new business or such, one will be using all four to create the item as one must obtain land to start the business, workers to help, a substantial amount of money to create the product, and be an entrepreneurship to think of ways to expand the business.
Physical Capital: Tangible asset that that are created by humans and somehow used in production. Physical capital is often used to refer to economic capital in some form. http://www.businessdictionary.com/definition/physical-capital.html
Example: In farming, one requires a tractor, a machinery to move the crops. The tractor would be a physical capital in this care it is a tangible object used for the purpose of production.
Human Capital: The knowledge, skills, competencies and other attributes embodied in individuals or groups of individuals acquired during their life and used to produce goods, services or ideas in market circumstances. https://www.economicshelp.org/blog/26076/economics/human-capital-definition-and-importance/
Example: An example of human capital includes education. Education is where one is able to develop ideas, creativity, and learn life skills that can be used in the future.
Entrepreneur: The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit. http://www.businessdictionary.com/definition/entrepreneurship.html
Example: There are many famous entrepreneurs in our lifetime. For example, Mark Zuckerberg dropped out of Harvard to proceed with his development with his worldwide famous app, Facebook. He took many risks in order to manage this business and now he is one of the youngest billionaires.