Warm Up Imagine you are trying to start your own business…What factors and resources might you need to start that business? What possible problems could you face as you begin? How could you try to avoid these problems from arising?

Entrepreneurs Use Factors of Production Entrepreneurs are people who decide how to combine resources to create new goods and services. Anyone who opens a business, large or small, is an entrepreneur. To make a profit, entrepreneurs are willing to take risks.

Factors of Production The first task facing an entrepreneur is to assemble factors of production, or the resources used to make all goods and services. Land - any materials found in nature that people use to make things or to provide services (I.E. oil, iron, coal, water, and forests). Labor - the effort people devote to tasks for which they are paid. Capital - any human-made resource that is used to produce other goods and services.

Types of Capital Human-made objects used to create other goods and services are physical capital. - The buildings that house a computer manufacturing company are physical capital, as well as their equipment. -Physical capital such as machines and tools helps workers produce goods and services more easily and at less cost. The knowledge and skills a worker gains through education and experience are human capital. - Computer designers go to college to study engineering, electronics, and computers. -The more skills a worker gains, the more productive he or she becomes.