Economic resources are the factors used in producing goods or providing services.

In other
words, they are the inputs that are used to create things or help you provide services. Economic
resources can be divided into human resources, such as labor and management, and nonhuman
resources, such as land, capital goods, financial resources, and technology.

Importance of Economic Resources

An economy is a system of institutions and organizations that either help facilitate or are directly
involved in the production and distribution of goods and services. Economic resources are the
inputs we use to produce and distribute goods and services. The precise proportion of each factor
of production will vary from product to product and from service to service, and the goal is to
make the most effective use of the resources that maximizes output at the least possible cost.
Misallocation or improper use of resources may cause businesses, and even entire economies, to
fail.

Human Resources
Labor is one of the classic factors of production, along with land and capital, discussed by
economists for well over a century. Even in today's technologically advanced world, human
labor is still needed to help process resources into products or to utilize resources to provide
services. Different types of labor include production labor and service labor. An example of
production labor is the classic factory worker. Service labor includes people involved in
providing a service, such as doctors, lawyers, accountants, sales people, mechanics, and
plumbers.
Management is another example of a human resource. As organizations became more complex
with the onset of the Industrial Revolution, employees were required to oversee and manage the
masses of workers engaged in the production process. Management is a resource that is used to
facilitate efficient and effective production or operations of a business so that it can accomplish
its goals. Rather than being directly involved in production or services, managers coordinate,
monitor and direct employees engaged in the production or service. Examples of management
include a direct supervisor all the way up to the president of a large multinational company.

Nonhuman Resources
Land, like labor and capital, is a classic factor of production. Land is all real estate and all
natural resources on or in it, such as trees, minerals, elements, metals, gems, natural gas, thermal
heat, oil, coal, water, and crops.

What Is the Meaning of Economic Resources?

Economics is commonly referred to as the social study of the allocation of goods and services used by
consumers and businesses. Resources are an integral part of economic study since they are the items
consumed by individuals and businesses. Economic resources are the goods or services available to
individuals and businesses used to produce valuable consumer products. The classic economic resources
include land, labor and capital. Entrepreneurship is also considered an economic resource because
individuals are responsible for creating businesses and moving economic resources in the business
environment. These economic resources are also called the factors of production. The factors of
production describe the function that each resource performs in the business environment.

Types

FOUR basic resources are found in the study of economics: land, labor, Entrepreneur and capital. Other
resources are included as well, such as, time and profit, although they are not considered as fundamentally
important as the first three resources.

Economic Definition of the Four Factors of Production

Land represents the abundance of all natural things, such as wildlife, timber, minerals or fields. Labor is
the effort of man to take the natural resources and convert them into valuable goods. Capital is the money
spent or invested into land and labor. Economic resources are the goods or services available to
individuals and businesses used to produce valuable consumer products. The classic economic resources
include land, labor and capital. Entrepreneurship is also considered an economic resource because
individuals are responsible for creating businesses and moving economic resources in the business
environment. These economic resources are also called the factors of production. The factors of
production describe the function that each resource performs in the business environment.

Land

Land is the economic resource encompassing natural resources found within a nation economy. This
resource includes timber, land, fisheries, farms and other similar natural resources. Land is usually a
limited resource for many economies. Although some natural resources, such as timber, food and animals,
are renewable, the physical land is usually a fixed resource. Nations must carefully use their land resource
by creating a mix of natural and industrial uses. Using land for industrial purposes allows nations to
improve the production processes for turning natural resources into consumer goods.

Labor

Labor represents the human capital available to transform raw or national resources into consumer goods.
Human capital includes all able-bodied individuals capable of working in the nation’s economy and
providing various services to other individuals or businesses. This factor of production is a flexible
resource as workers can be allocated to different areas of the economy for producing consumer goods or
services. Human capital can also be improved through training or educating workers to complete
technical functions or business tasks when working with other economic resources.

Capital

Capital has two economic definitions as a factor of production. Capital can represent the monetary
resources companies use to purchase natural resources, land and other capital goods. Monetary resources
flow through a nation economy as individuals buys and sell resources to individuals and businesses.
Capital also represents the major physical assets individuals and companies use when producing goods or
services. These assets include buildings, production facilities, equipment, vehicles and other similar
items. Individuals may create their own capital production resources, purchase them from another
individual or business or lease them for a specific amount of time from individuals or other businesses.

Fixed Capital

It includes new technologies, factories, buildings, machinery and other equipment’s.

Working Capital

It is the stock of finished goods or components or semi-finished goods or components. These goods or
components will be utilized in near future.

Capital productivity

New features of capital building, machinery or technology are commonly used to improve the
productivity of the labor. Such as the new ways of farming helps to enhance the productivity of the
agriculture sector and give more valuable jobs in this sector which motivates people to come out for work.

Infrastructure

It is a stock of capital that is used to maintain the whole economic system. Such as roads, railway tracks,
airports etc.

Entrepreneurship
Entrepreneurship is considered a factor of production because economic resources can exist in an
economy and not be transformed into consumer goods. Entrepreneurs usually have an idea for creating a
valuable good or service and assume the risk involved with transforming economic resources into
consumer products. Entrepreneurship is also considered a factor of production since someone must
complete the managerial functions of gathering, allocating and distributing economic resources or
consumer products to individuals and other businesses in the economy.

Following are the factors of Entrepreneurship:

 Income
 Wealth
 Labor and Wages
 Capital and Interest
 Profit and Enterprise

Significance

Each basic resource plays an important part in the economic cycle, since having control over one item
exclusively is not extremely valuable. Although one person may control a natural resource, labor and
capital are needed to convert the items to sellable goods.

Considerations

Individuals in a free market place a value on each resource and good produced from these resources. This
allows the economic marketplace to function in a format where all individuals can succeed when using
their resources.

Warning

Allowing a single entity to control all resources will lead to a socialist or communist society, which
distorts the free market’s natural ability to allocate resources according to each individual’s need.
Neoclassicism (from Greek νέος nèos, "new" and Latin classicus, "of the highest
rank") is the name given to Western movements in the decorative and visual arts,
literature, theatre, music, and architecture that draw inspiration from the "classical"
art and culture of classical antiquity. Neoclassicism was born largely thanks to the
writings of Johann Joachim Winckelmann, at the time of the rediscovery of
Pompeii and Herculaneum, but its popularity spread all over Europe as a
generation of European art students finished their Grand Tour and returned from
Italy to their home countries with newly rediscovered Greco-Roman ideals. The
main Neoclassical movement coincided with the 18th-century Age of
Enlightenment, and continued into the early 19th century, laterally competing with
Romanticism. In architecture, the style continued throughout the 19th, 20th and up
to the 21st century.