![]() ![]() Option A, paper, is not an example of land as a factor of production. Since sunshine is a naturally occurring resource, we classify it as land In our first example, we will identify an example of land as a factor of Raw materials, we can see that land is the principal factor of production. Since the production of goods always requires Land to also include other natural resources, such as coal, water, and sunshine, Physical pieces of land, such as farmland or a lot to build a house or factory on,Īre certainly examples of land as a factor of production. That can be found below, on, or above the surface such as minerals, water, agricultural goods, animals, and so Land includes Earth’s surfaces that can be used for farming, building, and mining, as well as the resources Let us consider each factor of production in detail.Īs a factor of production, land refers to natural resources that can be utilized for the production of new goods and The following diagram incorporates these terms to representĭifferent types of inputs and outputs of production.įactors of production are the inputs needed to produce new goods and services. We use them to specifically label categories of resources as factors of While land, labor, andĬapital are common words used broadly in everyday language, in economics, The respective types as land, labor, and capital. When resources are used to produce new goods and services, we will refer to Recall that resources can be categorizedĪccording to their present form as natural, human, and capital resources. Resources that are used to produce new goods and services are calledįactors of production. Hence, capital goods serve as both inputs and outputs of production. These are examples ofĬapital goods, which indirectly satisfy needs, while clean water, rice,Īnd wheat are consumption goods, which directly satisfy human needs. Production stage another time to produce new goods. Using natural resources, but they are capital resources that enter into the For instance, leather and car parts are produced While some resources used for productionĮxist in nature, other resources that are used during a production process have Fertilizing farmland to harvest riceĪnd wheat is also an act of production. Production is the process through which existing resources are utilized toįiltering and sanitizing water from seas, rivers, or lakes to obtain clean drinking
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