Read the 6 sections of this chapter on resource markets, including topics such as demand, supply, and price ceilings and floors.
There are three factors of production that are required to produce economic output: land, labor, and capital.
Discuss the role of capital and resources in production
Factors of production are the inputs to the production process. Finished goods are the output. Input determines the quantity of output; in other words, output depends upon input. Input is the starting point and output is the end point of a production
process and such input-output relationship is called a production function. There are three basic, otherwise known as classical, factors of production:
Land is sometime included with capital in certain situations, such as in service industries where land has little importance. All three of these are required in combination at a time to produce a commodity. In economics, production means creation or an
addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods or services.
In accounting and other disciplines, the phrase "capital" can also refer to cash that have been invested in a business. The classical economists also employed the word "capital" in reference to money. Money, however, was not considered to be a factor
of production in the sense of capital stock since it is not used to directly produce any good. The return to loaned money or to loaned stock was styled as interest while the return to the actual proprietor of capital stock (tools, etc.) is classified
It is important to note that the final output is the result of the combination of all of the inputs. Things like technological advancement and worker productivity are intricately tied to the productivity of the inputs; it is not enough to simply have the factors of production in one place without the knowledge and ability to convert them into the correct outputs.
Source: Lumen Learning, https://courses.lumenlearning.com/boundless-economics/chapter/capital-and-natural-resource-markets/
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