Factors of Production
The basic economic problem is that human wants are infinite but resources are scarce. The role of an economist is to get the most out of these scarce resources.
- Labour – the human input into the production process, the factor return is wages
- Land – any natural occurring factor of production, the factor return for land is rent
- Capital – any man-made factor of production, the factor return for capital is interest
- Enterprise – this is the person who organises the other 3 factors of production and takes business ideas with risk to their own money, the factor return of enterprise is profit