Question

The “things” used in making goods and providing services are _______.

Answer 1

Answer:

Factors of production

Explanation:

The "things" used in making goods and providing services are called factors of production.

Factors of production are resources needed and used in producing goods and rendering services. Before production can take place, factors of production have to be engaged. Factors of production are also called factor inputs. They are land, labor, capital and enterprise.

Land

Land can be defined as a free gift of nature and is fixed. It is immobile and durable. It is inexhaustible. The reward for land is rent. Example of land could be a building where production of goods and rendering of services take place.

Labor

Labor are simply workers who convert raw materials into finished goods. For instance in a bakery, labor convert flour and other ingredients into bread. Labor is a variable factor because a worker may be employed today and decide to leave the next day. Reward for labor is wages or salary.

Capital

Capital is an artificial and tangible factor input which ensures effective, efficient and mass production of goods and services. Capital enhances production and makes it easier. Capital is in diverse forms such as plant and machinery, vehicle, cash, raw materials, etc. Reward for capital is interest.

Enterprise (entrepreneur)

This is a person who organizes, controls and coordinates other factors of production so as to ensure that the goal of a business is achieved. He is regarded as the Chief Executive of Officer of an organization. He plans, takes decisions risk and is responsible for the outcome of the business. The reward for enterprise is profit.

Summarily, before a good can be produced and a service can be rendered, there must be a place for its production, the production processes have to be carried out by labor and/or capital and there must be a person who oversees what is being produced, either goods or services.