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Lesson Flashcards: Factors of Production Economics

Characteristics of labor

Human efforts that are voluntary (we choose to engage in them), painful (require effort), and endless (repeatedly engaged in)

Factors of production

Inputs needed to produce new goods and services, categorized as land, labor, capital, and entrepreneurship

The two classes of goods that satisfy needs, either directly or indirectly

Consumption goods and capital goods

Economic consumption

The decreased value of capital resources due to the development of more efficient technologies or the changing appetites of consumers

Labor

The human efforts utilized for the production of new goods and services

Rent

Compensation for providing land as a factor of production

Economic growth

The increase in the total output of production in the economy

Production

The process through which existing resources are utilized to obtain new goods and services

Human development

Suitable training or education of citizens that improves the contribution they can make to the nation’s workforce

Capital

Capital resources utilized for the production of new goods and services (e.g., cars, pencils, or computers produced by humans or human activity)

Fixed capital

Capital resources that can be used multiple times to produce new goods and services (e.g., factory machines and shovels)

Entrepreneurship

The organization of resources, risk-taking, and innovation by individuals known as entrepreneurs for the production of new goods and services

Land

Natural resources that can be utilized for the production of new goods and services

Economic development

The improvement in the quality of life or living standards for individuals in the economy

Characteristics of capital as a factor of production

Manufactured and depreciable

Circulating capital

Capital that can only be used once to produce goods or services and is consumed as a result of its use (e.g., gasoline or leather)

Characteristics of land as a factor of production

Gift of nature, permanence, and legal rights

Capital consumption

The final use (consumption) of fixed or circulating capital during the production processes of goods or services

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