Updated: Jun 29
To combine and organise scarce productive resources to produce goods and services to fulfil the needs and wants of consumers.
Scarce productive resources are also known as Factors of Production - "Land, Labour, Capital and Enterprise".
Every good or services produced for consumers requires at least 1 factor of production, which are then value add to create different variety and types of products
Example, A doctor (labour) would be able to treat patients with their skills and expertise in medicine. The doctor would need a clinic (land) to set up a clinic and purchase medical equipment (capital) for the doctor to perform procedures and consult patients. The doctor would need to apply for a business licence if it wants to run a private practice (enterprise).
What other examples can you think of?
As one of the key business objectives is profit, resources are scarce, it will have to be selected to decide which resources should be chosen to produce and value add on product that will maximize profit. This will involve opportunity cost.
Factors of Production
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