Factors+of+Production+and+Their+Payments-ECON

__ Factors of Production and Their Payments __
-Land (natural resources) -Labor (skills of people) -Capital (goods used to make other goods, tools, not money) -Entrepreneurial ability (organizes and coverts other resources)
 * 4** factors are…

They are **paid** in… -Land—rent -Labor—wage -Capital—interest - Entrepreneurial ability—profit

-fish -oil -water -corn -commercial real estate
 * Examples** of land would be

-human capital -song writing skills -unskilled McDonald’s worker
 * Examples** of labor would be

-auto assembly line equipment -robotic arm -tractor -factory
 * Examples** of capital would be

-Oprah Winfrey -Bill Gates -Steve Jobs -Farmer
 * Examples** of entrepreneurial ability would be


 * The factors of production and their payments are illustrated in the circular flow model.... **

[|Click here] to read an article about the production of oil. It connects to factors of production because there are many obstacles that an industry must overcome in order to make money off of their product. Factors such as weather affect the oil industry because the different seasons have a direct relationship with the amount of time people spend driving in their car. Thus, the demand for oil in cars changes when the seasons change. If land is not suitable for driving, then people do not want to use their cars.