PRODUCTION

Production is the process of altering inputs to increase their ability to satisfy human wants. Inputs are sometime called “factors of production” or resources. Typically, economists will categorize inputs as land, labor and capital. Superficially, labor is defined as human effort used to produce goods that satisfy human wants. An input that is a “gift of nature” is referred to as “land.” Capital is usually considered as an input that is produced by labor but is used for the further production of goods and services. Entrepreneurial ability was the last category of inputs to be added as a factor of production in market oriented economies. It is usually associated with the process of creating and innovating of new processes. The taxonomy of inputs, its relation social structure and the nature of economics will be considered more carefully later in the text.