Page 110 - Key to Social Studies 4

Factors of Production
When goods are produced, factories must
consider the kinds of materials they need to
make an item.
The materials are called factors of
production, or the economic resources
needed to start with raw materials and end
with a nished product for sale.
Economic resources can be either
renewable or nonrenewable.
Renewable resources are the resources that
will be naturally replaced or can grow
again, such as air, sunlight, soil, or animals
and plants.
Nonrenewable resources are the resources
that take a very long time to be replaced, or
may be something that cannot be
replenished. Oil, minerals, and coal are
considered to be nonrenewable.
When something is made, a producer needs
to consider these factors of production:
1. Land
Land represents a natural resource. Land is
considered a gift of nature and includes
things found both above ground like soil,
sunlight, rivers, and other water sources
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and below or underground resources
such as rocks and minerals.
2. Labor
Labor is the mental and physical work
done in the production process.
3. Capital
Capital is any form of wealth. It can be
money, buildings, trucks, or machines.
4. Entrepreneurship
An entrepreneur is a person who
organizes land, labor, and capital and
takes the risk of starting a new business
using innovative ideas to earn pro ts.
Bill Gates and Walt Disney are examples
of successful entrepreneurship and how
the factors of production are combined
to build great businesses.