Factors of Production

Definitions and Examples

Factors of Production are…

The resources used to make goods and services

Separated into three categories Land Labor Capital

Land

For Economic purposes, Land refers to all Natural Resources

Examples: Minerals Timber Real Estate

Labor

For Economic purposes, refers to the actual work an individual or individuals does

Examples: Un-Skilled Labor Semi-Skilled labor Skilled Labor Professional Labor (All 4 Categories show “work” being done)

Capital

For Economic purposes, Capital refers to man-made or possessed resources used to produce something else and falls into two categories Physical Capital

The tools or equipment used in production Human Capital

The skills or training of the workers Don’t confuse this with Labor (The actual

performance of work using your human capital)