CoreMicroeconomics: Exploring Economics pgs: 2850
• Capitalist/Market Economies: Private individuals and firms own most of the
resources. Decisions determined by individual desires for products and profit
making decisions by firms.
• Planned (socialist/communist) economies, resources are owned by the state and
most economic decisions are made by central government
• Production: The process of converting resources into goods and services
• Resources: Productive resources include land, labor, capital, and entrepreneurial
• Land: Includes natural resources such as mineral deposits, oil, natural gas, water,
and land in the usual sense of the word. Rent refers to the payment to land as a
• Labor: Includes the mental and physical talents of individuals who produce
products and services. The payment to labor is called wages
• Capital: Includes manufactured products such as tractors, welding equipment, and
computers that are used to produce other goods and services.