Capital

Land

Factors of Production

Text 2

ТЕКСТЫ ДЛЯ ЧТЕНИЯ

ЧАСТЬ V

ТЕКСТЫ ДЛЯ СТУДЕНТОВ ЭКОНОМИЧЕСКИХ СПЕЦИАЛЬНОСТЕЙ

Text 1

What Is Economics About?

Anyone beginning the study of a subject likes to have a concise description of its nature and content. Here is a modern definition of economics: Economics is a social science concerned chiefly with the way society employs its limited resources, which have alternative uses, to produce goods and services for present and future consumption. This definition needs some amplification.

1. Economics is a social science because it deals with the interactions of people (in particular, their interactions as they buy, sell, produce, and consume).

2. Resources are limited means that people taken together, people in any society want more goods and services than it is possible to produce. Human and material resources are scarce when compared with people’s wants – even in a relatively rich countries. Therefore it is important for any society to use resources effectively. Economics is concerned both with choices regarding the use of resources and with the forces that determine the choices.

3. Resources have alternative uses means that any resource that is being fully used for one purpose is not available to be used for another purpose. If a society decides, for example, to allocate more resources to the construction of highways, it will have fewer resources available for the construction of buildings. If it decides to allocate more resources to the production of military goods, it will have fewer resources available for the production of consumer goods.

Every economic system has various resources at its disposal to produce goods and services. These resources are of two broad types: material resources and human resources.

Material resources include such things as natural resources, raw materials, machinery and equipment, buildings, and transportation and communication facilities.

Human Resources consist of the productive physical and mental abilities of people. Economists divide property resources into two subcategories, “land” and “capital,” and human resources into two subcategories, “labor” and “entrepreneurship.” These four types of resources are known as the factors of production.

The term land, in economics, means all nonhuman or “natural” resources, such as land itself, mineral deposits, timber, and water. Land thus consists of all the natural physical stuff on which any civilization must be built.

Capital is an economic resource that can be used to help produce consumer goods and services, such as food, cars, clothing, and health care.

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