Factors of Production

The resources firms utilize to produce goods and services. Land, labor, capital and entrepreneurship encompass all of the inputs needed to produce a good or service. Land represents all natural resources, such as timber and gold, used in the production of a good. Labor is all of the work that laborers and workers perform at all levels of an organization, except for the entrepreneur. The entrepreneur is the individual who takes an idea and attempts to make an economic profit from it by combining all other factors of production. The entrepreneur also takes on all of the risks and rewards of the business. The capital is all of the tools and machinery used to produce a good or service.

For example when Apple produces iPods it utilizes machines and factory buildings, which are considered capital. Apple also uses many engineers, financial analysts and other workers. Furthermore, the different components of the iPod use natural resources such as copper that come from the land. Last but not least, the owners serve as the entrepreneurs who take their idea for iPod and bring it to life for economic profit.