The Four Productive Resources

What this means

Nothing gets made out of nothing. To make any good or provide any service, you need productive resourcesThe things used to make goods and provide services.. There are four kinds, and it helps to think of them as four ingredients.

The first kind is natural resourcesThings that come from nature, like water, trees, soil, and sunlight.. These come from the earth. Water, trees, soil, sunshine, and rocks are natural resources.

The second kind is human resourcesThe people who do the work of making goods or providing services.. These are the people who do the work, using their hands and their brains.

The third kind is capital resourcesTools, machines, and buildings that people made and use to make other things.. These are the tools and machines and buildings that people built to help them make other things. An oven, a hammer, a delivery van, and a school building are capital resources.

The fourth kind is different. An entrepreneurA person who has an idea for a business and takes a chance to start it. is the person with the idea, the one who gathers all the other resources and takes the chance of starting a business. Without the entrepreneur, the wood, the workers, and the tools just sit there in separate piles. That is why entrepreneurs count as their own resource.

Why it matters

If you ever want to start something of your own, a lemonade stand, a dog-walking club, a comic book you sell to friends, you will need all four. Thinking about resources ahead of time is how you find out what is missing before you run out of it halfway through.

It also explains why some things are hard to make. If a resource is missing or hard to get, you cannot produce as much as you want. That idea comes up again and again in economics.

Try it

1. Think of a business you would actually like to own someday. Write it at the top of your paper. Anything counts: a bakery, a skate shop, a dog-walking service, a video game studio.
2. Draw four boxes. Label them Natural Resources, Human Resources, Capital Resources, and Entrepreneur.
3. Fill in each box with at least two items your business would need. Push yourself on the natural resources box; almost every business uses at least one thing that came out of the ground, even if it arrived as a finished product.
4. In the Entrepreneur box, write your own name and one sentence about the idea you would be taking a chance on.
5. Trade papers with a partner. Try to think of one resource your partner forgot. Add it in a different color.
6. Circle the one resource you think would be hardest to get. Tell the class why.

Check yourself