Factors of production, Microeconomics

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Factors of Production

Factors of production are the resources that are utilized to manufacture goods and services:

1. Natural resources:

The things developed by acts of nature like water, land, mineral, oil and gas deposits, nonrenewable and renewable resources.

2. Labor:

The human effort either physical or mental, utilized by workers in the manufacturing of goods and services.

3. Physical capital.

All the buildings, machines, equipment, roads and other objects created by human beings to manufacture goods and services.

4. Human capital:

The knowledge and skills taken by a worker by education and experience.

5. Entrepreneurship:

The effort to combine the manufacturing and sale of goods and services. Entrepreneurs take risk and commit money and time to a business without any assurance of profit.


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