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Allocative-Efficiency in Perfect Competition
Barriers to Entry
Biases and Loaded Terminology
Change in Demand vs. Change in Quantity Demanded
Consumer & Producer Surplus in a Monopoly
Correlation vs. Causation
Definition of Economics
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Economic Resources - Labor and Entrepreneurial Ability
Entrepreneurial ability is a factor of production, or one of four resources employed by businesses to produce goods and services. Entrepreneurial ability is measured by how well the entrepreneur combines resources, makes policy decisions, innovates and how well he/she takes risks. Entrepreneurs have to come up with ideas for new products and make decisions that direct the company. An important concept related to entrepreneurial ability is normal profit. Normal profit is treated as an economic cost and is the next best alternative line of work for the entrepreneur.
Labor is another factor of production. Labor is when people work for others in order to produce goods and services. Specifically, it is the amount of human effort that goes into production of goods and services. Examples of labor include the services of a cashier, professor, basketball player, chemist etc. Wages are income received for labor. It is important to note that both labor and entrepreneurial ability are human resources, not economic resources. Human resources involve humans, whereas economic resources are resources such as land and capital.
Video which explains the Four Economic resources:
In the Dilbert cartoon, Dilbert's boss illustrates some of the qualities of entrepreneurial ability. He makes important decisions and directs the company.
Q: Fill in the blank:
The four factors of production (economic resources) are Land, Capital, (blank) and (blank).
A: Labor and Entrepreneurial Ability
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