B) money. Answer: D Type: Definition Page: 4 14. Factor of production that includes natural resources not created by humans: Capital: factor of production that includes tools, equipment, machinery, and factories used in the production of goods and services. Economic goods are goods and services that require scarce resources or factors of production to produce them. D) Only those resources that are privately owned are counted as factors of production. Thus, if the input is scarce in relation to the need for it, it is regarded as a factor of production.   The factors of production attempt to instill the idea that resources are scarce. Scarce goods are those for which the demand would be greater than the supply if their price were zero. Prateek Agarwal. Factors of Production An alternative term used by economists when talking about resources. A) Factors of production are also known as resources. C Market failure occurs when: A) markets are competitive. Factors of production are the inputs needed for the creation of a good or service. Given the economy’s factors of production and technology, the economy can produce various combinations of the two goods. C) capital. D) natural resources. C) Factors of production include land, labor, capital, and entrepreneurship. The factors of production include land, labor, entrepreneurship, and capital. The production can be increased only by increasing the quantity of the variable factors or by having additional shifts or by increasing the hours of work. Prateek Agarwal’s passion for economics began during his undergrad career at USC, where he studied economics and business. Member since 20 June, 2011. Things like labor, entrepreneurship, land and capital are common examples of these. who takes a risk and creates the business using the other three factors of production. The most successful are innovative risk-takers. According to Eraser, “Factor of production as a group or class of original productive resources.” The production process of an organization can be efficient, if there is an optimal use of factors. The model assumes that the economy has factors of production that are fixed in both quantity and quality. B) private decisions do not result in an efficient allocation of scarce resources. What is the fundamental problem of economics: Scarcity: What are the four factors of Production: Land, Labor, Capital, entrepreneurs Because of this shortage, economic goods have a positive price in the market. A factor of production that has been produced for use in the production of other goods and services is: A) labor. These are often scarce resources. An entrepreneur combines the other three factors of production to add to supply. ... Enterprise - This is the entrepreneur. When illustrated graphically, the production possibilities model typically limits our analysis to two goods. 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