Animal Farm
Kharlo E. Oiga Basic Economics With LRT
B.S. CE MWF 12-1
Explain why does money not a factor of production
Human activity can be broken down into two component parts; producing and consuming. Where there is production a process of transformation takes place. Inputs are converted into an output. The inputs are classified and referred to as, land, labour, and capital. Collectively, the inputs are called factors of production.
When the factors of production are combined in order to produce something, a fourth factor is required. Goods and services do not produce themselves but need some conscious thought process in order to plan and implement manufacture. This thought process is often called entrepreneurship. Note that, money is not considered as a factor of production. Money is only used to facilitate trade but does not actually produce goods/ services on its own.
You may think that money is considered to be a capital. That may be true in some degree but in economics, the capital is considered to be the machinery, tools and buildings humans use to produce goods and services. Some common examples of capital include hammers, forklifts, conveyer belts, computers, and delivery vans. Capital differs based on the worker and the type of work being done. For example, a doctor may use a stethoscope and an examination room to provide medical services. Your teacher may use textbooks, desks, and a whiteboard to produce education services. The income earned by owners of capital resources is interest.
To explain further, money is used to buy goods and services that can be considered as a factor of production but not directly used to produce goods and services. Money is not capital as economists define capital because it is not a productive resource. While money can be used to buy capital, it is the capital good (things such as machinery and tools) that is used to produce goods and services. Money merely facilitates trade, but it is not in itself a productive
B.S. CE MWF 12-1
Explain why does money not a factor of production
Human activity can be broken down into two component parts; producing and consuming. Where there is production a process of transformation takes place. Inputs are converted into an output. The inputs are classified and referred to as, land, labour, and capital. Collectively, the inputs are called factors of production.
When the factors of production are combined in order to produce something, a fourth factor is required. Goods and services do not produce themselves but need some conscious thought process in order to plan and implement manufacture. This thought process is often called entrepreneurship. Note that, money is not considered as a factor of production. Money is only used to facilitate trade but does not actually produce goods/ services on its own.
You may think that money is considered to be a capital. That may be true in some degree but in economics, the capital is considered to be the machinery, tools and buildings humans use to produce goods and services. Some common examples of capital include hammers, forklifts, conveyer belts, computers, and delivery vans. Capital differs based on the worker and the type of work being done. For example, a doctor may use a stethoscope and an examination room to provide medical services. Your teacher may use textbooks, desks, and a whiteboard to produce education services. The income earned by owners of capital resources is interest.
To explain further, money is used to buy goods and services that can be considered as a factor of production but not directly used to produce goods and services. Money is not capital as economists define capital because it is not a productive resource. While money can be used to buy capital, it is the capital good (things such as machinery and tools) that is used to produce goods and services. Money merely facilitates trade, but it is not in itself a productive