{"id":6222,"date":"2021-10-01T08:21:57","date_gmt":"2021-10-01T08:21:57","guid":{"rendered":"http:\/\/euseguros.pt\/?p=6222"},"modified":"2021-10-01T08:57:18","modified_gmt":"2021-10-01T08:57:18","slug":"factors-of-production-overview-and-characteristics","status":"publish","type":"post","link":"https:\/\/euseguros.pt\/en\/factors-of-production-overview-and-characteristics\/","title":{"rendered":"Factors of Production – Overview and Characteristics"},"content":{"rendered":"

[et_pb_section fb_built=”1″ _builder_version=”4.4.3″][et_pb_row _builder_version=”4.4.3″][et_pb_column type=”4_4″ _builder_version=”4.4.3″][et_pb_text _builder_version=”4.4.3″ hover_enabled=”0″]<\/p>\n

What are\u00a0 Factors of Production?<\/strong><\/h3>\n

There are 4 key resources found in an economy. These are:
<\/strong><\/p>\n

1. Land<\/p>\n

2. Labour<\/p>\n

3. Capital<\/p>\n

4. Entrepreneurship<\/p>\n

Land earns rent<\/strong><\/span> and is inelastic which means that it is less responsive to the changes in its price<\/b>, because of its limited availability. Thus, even when the price of the land increases, its supply cannot be increased.<\/span><\/span><\/p>\n

Capital<\/strong> earns interest<\/span><\/span><\/p>\n

Labour<\/strong> earns wages and salaries<\/span><\/span><\/p>\n

Entrepreneurship<\/strong> earns profit.<\/span><\/span><\/p>\n

[\/et_pb_text][et_pb_image src=”http:\/\/euseguros.pt\/wp-content\/uploads\/2021\/10\/FactorsofProduction.jpg” _builder_version=”4.4.3″ hover_enabled=”0″][\/et_pb_image][et_pb_text _builder_version=”4.4.3″ hover_enabled=”0″]<\/p>\n

These factors of production combined and its relationship bewteen households and businesses compose the Circular Flow model.<\/strong><\/span><\/span><\/p>\n

[\/et_pb_text][et_pb_text _builder_version=”4.4.3″ hover_enabled=”0″]<\/p>\n

Circular Flow Model
<\/strong><\/h3>\n

[\/et_pb_text][et_pb_image src=”http:\/\/euseguros.pt\/wp-content\/uploads\/2021\/10\/The-circular-flow-model-that-depicts-the-interrelationship-between-households-and.ppm_.png” _builder_version=”4.4.3″ hover_enabled=”0″][\/et_pb_image][et_pb_text _builder_version=”4.4.3″ hover_enabled=”0″]<\/p>\n

How does it work?<\/strong><\/h3>\n

The Factor Market <\/strong>are the Factors of Production<\/p>\n

The Product or Goods Market <\/strong>are the markets for the output of production<\/p>\n

Intermediate Goods & Services <\/strong>are purchased as input to produce Final Goods & Services<\/strong><\/p>\n

Firms pay for land, labour and capital(equity\/debt)<\/p>\n

Households pay for Goods&Services to Businesses.<\/p>\n

This flow of money can be made bigger or smaller by money injections or money withdrawals.<\/p>\n

Injections<\/strong><\/span><\/p>\n

G – Government Spending<\/strong> – (Public Sector, Education, Healthcare, Roads…)<\/p>\n

I – Investment Spending<\/strong> – This is money firms borrow in order to invest in the Economy<\/p>\n

X – Export Earnings<\/strong> – Products&Services that leave this economy and goa broad. Money comes back as an exchange.<\/p>\n

Withdrawals<\/strong><\/span><\/p>\n

T – Taxation – <\/strong>Governament taxation<\/p>\n

S – Savings<\/strong> – Banks use savings to lend out to business owners<\/p>\n

I – Imports<\/strong> – Money spent from this economy on foreign Goods& Services<\/p>\n

By injecting more capital or withdrawing it from the economy, households and businessess are affected in regards to their investment decisions, as these have a large impact on their resources.<\/p>\n

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Factors of production refers to the inputs needed to produce goods and services.The four factors are land, labor, capital and entrepreneurship<\/p>","protected":false},"author":1,"featured_media":6223,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[152,172,153],"tags":[176,179,177,178,173,175,174],"yoast_head":"\nFactors of Production - Overview and Characteristics - EU Seguros<\/title>\n<meta name=\"description\" content=\"Factors of production refers to the inputs needed to produce goods and services.The four factors are land, labor, capital and entrepreneurship\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/euseguros.pt\/en\/factors-of-production-overview-and-characteristics\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Factors of Production - 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