...................................................................................................................................................................................................... Standard E1.2>

Define each of the productive resources (natural, human, capital) and explain why they are necessary for the production of goods and services.


Focus Question: What do people need in order to produce goods and services?


Map icon.pngClick here for a map of the World's resources by country.

Steve Jobs introducing the iPad, January 27, 2010
Steve Jobs introducing the iPad, January 27, 2010

Businesses need a combination of the factors of production. The four factors of production are land, labor, capital, and entrepreneurship.
  • Land is any natural resource.
  • Labor includes the efforts of workers.
  • Capital includes any man made goods used to produce other goods. Capital is sometimes divided into physical and human categories. Physical capital includes things like factories, machines, tools, etc. and human capital includes knowledge and special skills related to job performance.
    • Entrepreneurship is the practice of combining the other factors of production to create goods and/or services.
    • In a capitalist or free market system, an entrepreneur is someone who recognizes profitable ways to organize land, labor and capital.
timber-plantations-forests_512.jpgFire-fighters.jpg
external image Red_apple.jpg As a way to critically examine success in business and in life, see "The Matthew Effect," a phenomenon discussed by Malcolm Gladwell in his book Outliers to show how success creates success as those experiencing success take advantage of perceptions that they should be successful.

lesson_plan_icon.jpgLesson Plan: The Productive Blues (Jeans)


lesson_plan_icon.jpgWork Sheet: Factors of Production

Overview of Productive Resources

Student-Written Example

A local, family-owned pizza parlor uses all four factors of production. They use tomatoes and flour, which count as land. They use cooks and delivery drivers which count as labor. They use ovens and cash registers that count as physical capital. When they train new employees who learn new skills they add to their human capital. And the owner counts as an entrepreneur because he organizes all of these resources to produce pizzas.

Standardized Test Items and Samples of Student Work.


1.) Which of these is not a factor of production?
a.) land
b.) money
c.) labor
d.) physical capital

2.) Taking an economics course in high school may increase the value of which factor of production?
a.) physical capital
b.) land
c.) human capital
d.) the stock market

Scroll down to the bottom of the page to check the answers.
click here for a Youtube video describing productive resources
The following PowerPoint slides were created by a student as part of a unit assessment. They may not be perfect but are an example of how students can show that they have met the econ1-1Labor.jpgperformance criteria of the standard.
econ1-1Land.jpg
econ1-1Capital.jpg















econ1-1Entre.jpg


















Answers to Multiple Choice Assessment Questions: 1=B , 2=C