1.3 Economic Resources Flashcards
What are the 4 factors of production?
-Capital
-Enterprise
-Land
-Labour
Describe capital
-Physical: goods which can be used in the production process
-Fixed: Machines; buildings
-Working: finished or semi-finished consumer goods
Describe entrepreneurship
-Managerial ability. The entrepreneur is someone who takes risks, innovates, and uses the factors of production.
-Resources are drawn
together into the production process.
Describe land
Natural resources such as oil, coal, wheat, water.
-It can also be the physical space for fixed capital
Describe labour
-Human capital, which is the workforce of the economy.
What is the reward/incentive of the factors of production?
-Capital: interest from the investment
-Enterprise: profit- an incentive to take risks
-Land: rent
-Labour: wages
What is the economic problem?
-The environment is a scarce resource.
-There are unlimited wants but scarcity of resources on the planet.
Describe renewable resources
-Renewable resources can be replenished, so the stock level of the resources can be maintained over a period of time.
-For example, commodities such as oxygen, fish, or solar power are renewable assuming the rate of consumption of the resource is less than the rate of replenishment.
-If the resource is consumed faster than it is renewed, the stock of the resource will decline over time
-This is important in environmental economics, and can be managed by preventing or limiting deforestation, or imposing fishing quotas.
-Renewable resources are sustainable.
-However, currently, resources are being consumed faster than the planet can replace them
Describe non-renewable resources
-Non-renewable resources cannot be renewed.
-For example, things produced from fossil fuels such as coal, oil and natural gas are non-renewable.
-The stock level decreases over time as it is consumed.
-Methods such as recycling and finding substitutes, such as wind farms, can reduce the rate of decline of the resource.
