Economic resources

• Economic resources refers to the factors of production.
• LAND: natural resources, such as water and coal, or physical spaces. Incentive: rent.
• LABOUR: human capital, i.e. the workforce of the economy. Incentive: wages.
• CAPITAL: physical goods which can be used during the production process, e.g. machinery. Incentive: interest from investment.
• ENTREPRENEURSHIP: the managerial ability; someone who takes risks, innovates, and uses the factors of production. Incentive: profit.
• The environment is a scarce resource. There are only a limited amount of resources on the planet.
• Renewable resources


  They are sustainable; and they can be replenished (e.g. oxygen or fish). Their stock level can be maintaned over time assuming the rate of consumption is less than the rate of replenishment. If this is not the case, the stock of the resources will decline over time.
• The consumption of renewable resources can be managed by e.g. limiting deforestation and setting quotas.
• Currently, resources are being consumed faster than the planet can replace them. The Worldwide Fund for Nature claims that two planets will be required to meet global demand by 2050 if this continues.
• Non-renewable resources


  They cannot be renewed, (e.g. fossil fuels such as coal). Stock level decreases as it is consumed.
• Methods such as recycling and finding substitutes (e.g. wind farms) can reduce the rate of decline of the non-renewable resources.