Resources and factors of production. Economic resources and factors of production Economic resources and factors of production Differences

The source of any production is resources, i.e. a set of natural, social and spiritual elements in the process of production of goods, services and other values. Resources are diverse in their composition, they are usually divided into four groups: natural, labor, material, financial.

Natural resources constitute the natural basis for the production of material goods. The composition of natural resources includes: land, its subsoil, forests, water, air. Mankind uses solar energy, tidal energy, wildlife resources, minerals, etc. Some of these resources are non-renewable (oil, gas, coal, ore), while others are renewable. So, for example, due to effective agronomic measures, it is possible not only to restore, but also to improve soil fertility.

Human Resources - this is the economically active part of the country's population, which has the physical and spiritual abilities to participate in labor activity. In a market economy, the requirements for the quality of labor resources are increasing: their knowledge, educational level, professional training, and health.

Material resources society is a set of objects with the help of which production is carried out. They represent the main part of the productive potential of society. Material resources include buildings, structures, machines, machine tools, mechanisms, stocks of raw materials and materials, roads, bridges, communications, etc. Material resources are sometimes characterized as investment resources or means of production. They consist of tools and objects of labor, or what is described by the concept of " capital».

Natural, labor and material resources are basic resources. They form a prerequisite for any even the simplest production.

Financial resources are, in a certain sense, derivatives of the underlying resources. These are foreign exchange reserves and stocks of precious metals, cash savings of households and enterprises.

A special role in the transitional economy is played by such a resource How information , which is presented in the form of scientific, statistical, technological, design, management information.

An important economic resource in a market economy is time . Economic entities in their economic activities have a limited amount of this non-reproducible resource. The problem of time manifests itself in the existence of time limits for every economic action.

Among economic resources, one should single out exhaustible and inexhaustible, reproducible and non-reproducible, as well as alternative and non-alternative resources.

Any production, regardless of the economic system in which it is carried out, consists in the consumption of economic resources. That part of economic resources that is directly involved in the production process and is used as its conditions is commonly called production factors. Economic resources in terms of volume are always greater than the actually used factors of production, and economic entities never set the task of involving all available economic resources in the sphere of production. Thus, the concept of "economic resources" is broader than "factors of production".

In economic theory, one can find various approaches to the classification of factors of production. In Marxist theory, three factors are distinguished: labor, object and means of labor. Sometimes they are formed into groups and distinguish between personal and material factors. The personal factor includes the labor force, which is a combination of the physical and spiritual abilities of a person that are used in the production process; to material - objects and means of labor, which together constitute the means of production.

Generally accepted in economic theory is division of factors of production into three classical types: land, labor, capital.

Earth in the meaning of a factor of production, it is interpreted: 1) as natural resources of all kinds involved in production, 2) as land itself - a natural most important resource.

Work as a factor of production is an activity associated with the expenditure of human capital (a set of intellectual, professional, physical, mental and other abilities of a person) and aimed at the production of material goods and the provision of services.

Capital acts as a set of heterogeneous and reproducible resources, the use of which in the production process allows increasing labor productivity. The capital structure consists of equipment, intermediate product, money, securities.

In modern conditions of production, as a special factor, entrepreneurship . This is a kind of labor, which is characterized by high organizational skills, a high level of qualification, innovation, and entrepreneurial risk. This type of activity involves entrepreneurial ability as a special type of human capital, which consists in the effective combination of factors of production to create goods and services that generate income for all participants in the enterprise and satisfy social needs.

Economic resources are prepared means necessary for the implementation of the process of production of material goods. The role of resources in the economy is determined by the following functions:

- production, lies in the fact that resources ultimately ensure the creation of consumer goods and services that satisfy social needs;

- efficient, is to promote a greater effect in the production of goods and services by saving resources in order to get more useful effect per unit of costs;

- economic, consists in the formation of an economic basis for the receipt of income by the owner of the resource when it is sold to the consumer.

Resource structure reflects the nature of their origin. Moreover, with the development of society and scientific and technical progress, the structure of resources is noticeably enriched. In modern conditions, it is customary to allocate the following types of resources:

- Natural resources, including land, forest, water, minerals, energy resources, etc., which are explored, identified, involved or can be used in social production;

- material resources consisting of machines, equipment, finished raw materials and materials, buildings, structures, etc. - created in the process of human interaction with natural resources;

- human resources, including, a) the labor of employees who directly create goods and services, b) the entrepreneurial abilities of employees who ensure the organization of production, making economic decisions, determining the prospects for the development of entrepreneurial activity;

- informational resources, consisting of information (scientific, technical, technological, etc.) and means of ensuring its receipt, transmission, processing and consumption.

The main feature of economic resources is their limitedness (rarity). Therefore, it is impossible to satisfy the needs of all members of society simultaneously and in full. The main reasons for this are. First, some of the resources are not renewable, primarily those that are easily available in nature and their reserves are declining (raw materials, energy).

Second, many resources are inelastic, that is, not fungible in the production of alternative goods. For example, not all land used for construction is suitable for growing crops. And the one that is used for growing grain is not always suitable for growing grapes.

Thirdly, the ecological state of the surrounding natural sphere. There are limiting environmental loads on natural resources (energy, materials, water and mineral resources, land), in the form of threshold situations, beyond which, with an increase in production, use of resources, the quality of the environment deteriorates. Consequently, there is an ecological resource base that limits the possibilities for expanding production and using natural resources.

Based on these characteristics, in any society there are problems of rational use of resources, the use of more efficient methods of their processing, so as not to worsen the environmental conditions of the natural environment.

The economic resources involved in production turn into factors of production. Resources and factors are the same in terms of goals and functions, but differ in form, connections and actions. Firstly, the factors are the transformed natural and material resources into specific tools, raw materials, energy. Human resources acquire a specific professional qualification structure. Secondly, resources turn into factors when they are directly interconnected. Only when man's labor force is combined with natural and material resources is the labor process and the production process possible. Thirdly, any factors, including factors of production, become such when they are not static, but in motion, in action as external causal phenomena that provide changes in a particular process. Starting with the French economist J. Sayy, who put forward the theory of three factors, they include labor, land and capital. In this case, the primary factors are land and labor, because the supply of these factors is determined outside the sphere of the economy itself. They are primary from the nature from which they come. The secondary factor is capital, as a factor produced by the economy itself. People always strive to turn the primary factors of production (labor, land) into capital as a means to increase the wealth of nations.

Earth, combined with labor, is a factor of production. It acts both as a means of labor when agricultural products are cultivated (grown), and as an object of labor, since it contains all the substances necessary for a person that he can adapt, transform into consumer goods. At the same time, the earth is inseparable from nature itself and performs two functions: a) as a factor of production, b) as a habitat for a person - an objective factor in the reproduction of human life. Here we see both unity and contradiction. The expansion of the use of land as a factor of production worsens the conditions for human life. The resolution of this contradiction is possible on the basis of the creation of a normal ecological and economic system. This requires, first of all, a change in production technology, the approximation of artificial technology to natural processes, that is, the introduction of biotechnologies, waste-free and low-waste technologies.

Work as a factor of production appears when the labor force is combined with the instrument of labor and the labor process begins. It is labor that sets in motion the material factors of production and creates the product. A person can render this or that service to another person only by his work. Any service ends with a concrete result thanks to labor. The socio-economic form of labor as a factor of production differs from the form of other factors of production. The latter may have different owners, have a different form or type of ownership. Labor belongs to the one who owns the labor force. The labor force always has the personal property of the person who has the physical and mental abilities to work. In contrast to the variety of forms of ownership of the material factors of production, there is only individual ownership of each of his labor power, his labor, regardless of whether the owner is an employee or an individual producer.

In reality, in economic practice, the inclusion of a worker in the production process is carried out through a form of employment, which has a different content depending on what economic relations it serves. Ultimately, the service created by the employee is exchanged for wages issued by the employer. Thus, in social production, a person acts in three of his main functions: a) as the main factor of production, through labor; b) as a subject of industrial relations; c) as the ultimate goal of production, through the created product that satisfies its needs.

Capital as a material factor of production has a multilateral structure. It includes, first of all, means of labor and objects of labor. The subject of labor, this is what human labor is aimed at: the earth, its bowels, raw materials - a substance of nature that has undergone primary processing (coal, metal, cotton, etc.). means of labor, those things with the help of which a person influences the object of labor and changes it. The main means of labor are the instruments of labor (machines, aggregates, equipment and other mechanical means of labor), which constitute active part of the means of labor which directly affects the object of labor. Those means of labor which indirectly serve to transform the objects of labor form passive part(building, structure, road). The object of labor and the means of labor together form means of production.

The material factors of production also include information and the means to ensure its reproduction; energy , without which modern production is unthinkable. An important material factor of production is production function as a set of technology and achievements of scientific and technical progress introduced into production. It is the production function that reflects the achieved method of processing the object of labor, the combination, quantitative and qualitative ratio of the factors of production used. Its objects in a materialized form are units, equipment, production lines, automated systems, and in an intangible form - technical documentation, knowledge, know-how experience, etc.

The interaction of factors of production reflects both their unity and inconsistency. The unity is that the action of one or another factor is possible only when it is combined with another factor. Without man's labor power, material factors are dead. But a person without tools cannot carry out the process of labor and create the blessings of life. Their inconsistency is revealed in the process of development and functioning, as a result of uneven improvement, quantitative and qualitative inconsistencies. The resolution of these contradictions is possible on the basis of action economic laws of development of factors of production. These laws express economic relations regarding the interaction of material and personal factors of production. These laws include the law of conformity of factors of production. This law is characterized by its content:

a) the correspondence of the factors of production is not static, but constantly changing, since both the means of production and the labor force are constantly evolving;

b) conformity in quality, since the created more advanced machines impose new requirements on the qualifications of the workforce. Therefore, it is necessary to bring the ability of a person into line with the achieved level of the means of production;

c) compliance in quantity, because the number of workers must correspond to the number of jobs, otherwise equipment will either be idle and production efficiency will fall, or unemployment will increase.

Among the laws of development of factors of production should also include the law of increasing labor productivity. Labor productivity is the fruitfulness (efficiency) of labor, expressed in the amount of product created per unit of working time, or the amount of labor spent per unit of product. Productive work, as a rule, is characterized by great intensity and complexity. Labor intensity, is its density, expressed by the amount of labor expended per unit of working time. hard work, it is labor performed by a more skilled labor force, as opposed to simple labor performed by a less skilled labor force. The operation of the law of correspondence of factors of production has a positive effect on the law of increasing labor productivity, since a smaller amount of more skilled labor is able to set in motion complex equipment and create more products with its help.

Production resources are a combination of various natural, social and spiritual forces that can be used in the process of creating goods, services and other values.
In economic theory, resources are divided into the following groups:

1. natural resources - potentially suitable for use in the production of natural forces and substances. Among them, there are inexhaustible (solar energy, wind energy) and drawable (can be renewable (forest, water) and non-renewable (oil, gas, ore deposits, etc.). Many natural resources are rare, and their reserves are decreasing every day;
2. material - all man-made (man-made) means of production and objects of labor, which themselves are the result of production;
3. labor - able-bodied population;
4. financial - funds that the company is able to allocate for the organization of production;
5. information - data necessary for the functioning of automated production and its management with the help of computer technology.

Along with the concept of "resources of production" economic theory operates with the concept of "factors of production". When it comes to resources, they mean those natural and social forces that can potentially be involved in production, and the factors of production are the resources actually involved in the production process.
In economic theory, the main and additional factors of production are distinguished. The main factors of production are labor, land and capital. According to leading economists, additional factors of production include entrepreneurship, science as a productive force, and information technology.
Labor is a person's abilities and skills that can be used in the production of goods and services. To be more precise, here we are talking about the labor force as the totality of the physical and spiritual forces of a person, his ability to work. The labor force in each particular country (region) is limited by the number of adult working-age population. The decline in the birth rate and the aging of the population associated with it pose the problem of the effective use of the labor force very acutely.
Capital - production resources created by people (buildings, structures, equipment, tools, vehicles, semi-finished products) used in production. Their number in the economy is not unlimited, in addition, they tend to wear out during operation, so they periodically require replacement.
Land - natural goods that are used in the creation of goods and services (minerals, forests, water, air, land plots).
Entrepreneurial ability (entrepreneurship) is a special kind of human activity, which consists in the ability to most effectively use other factors of production.
Science as a factor of production is a sphere of human activity, the function of which is the development and systematization of objective knowledge about reality. The features of this factor of production are that science:

• becomes a participant in production as an element of the productive forces;
• has an impact on the level of production efficiency;
• affects the process of training a highly skilled workforce;
• determines the level of technology and organization of production;
• becomes a direct productive force.

Information as a factor of production provides systematization
knowledge materialized in the system of mechanisms, machines, equipment, management and marketing models.
The environmental factor is becoming increasingly important in modern production, which acts either as an impetus for economic growth, or as a limiter of its capabilities due to the negative impact on the natural environment.
Some economists single out time as a special economic resource. People in their production and economic activities have a limited amount of this non-reproducible resource.
A great influence on the efficient use of resources is exerted by production technology, which is specific methods of processing objects of labor, a certain order of production processes, as well as the organization of production, ensuring the coherence of the functioning of all its resources. The organization of production, labor and management is called management, which in the economic literature of the XX century. considered a factor of production.
A special role in the modern economy is played by such a factor as infrastructure - a set of industries and areas of activity that create general conditions for the functioning of production.
All factors of production, firstly, are inextricably linked and are interchangeable. Secondly, each good for its production requires a certain set of factors. Thirdly, any good can be produced by using various factors in various combinations and proportions. Fourthly, the economic entity organizing production combines all its factors in such a way as to obtain more product at the lowest possible cost. Fifth, all economic factors of production are available in limited quantities. This poses a problem for society to use them effectively. Sixth, the organization of production ensures the coordinated functioning of all factors of production, their proportional quantitative ratio, interchangeability.
Man is the main goal and factor of production, its development and improvement. As a participant in the production, he appears in three persons. On the one hand, a person is a producer directly involved in the creation of goods and services. On the other hand, he is a consumer who uses everything that is obtained in the production process. In addition, a person coordinates, coordinates the actions of producers and consumers, performing the function of a manager.
It is necessary to pay attention to the fact that money is not a factor of production. Nothing can be done with money, but it is a condition for acquiring resources. Funds are attracted to buy factors of production from their owners, and thus provide a real opportunity to combine resources in a single production process.
Tangible and intangible goods and services
Benefits are means of satisfying people's needs. There are many criteria on the basis of which different types of benefits are distinguished.
Goods can be classified:

1. on material, including natural gifts of nature (earth, air, water, climate); production products (food, buildings, structures, machines, tools);
2. on non-material, having the form of activity useful to people and influencing the development of human abilities. They are created in the non-productive sphere (health care, education, culture, etc.). These include internal benefits given to man by nature (scientific abilities, voice, ear for music, etc.), as well as external benefits (what the outside world gives to satisfy needs (reputation, business connections, patronage, etc.). .).

An essential feature of human life and activity is dependence on the material world. Part of the material wealth is available in abundance, and therefore they are always available to people (air, sunlight, wind energy). Such benefits in economic theory are called free or non-economic. As long as these conditions persist, these benefits and the needs for them are not the concerns and calculations of man, therefore, they are not studied in economics.
Other material goods are available in limited quantities (various kinds of "rarities"). In order to satisfy the needs in them and to have them in an accessible quantity, human efforts are needed to obtain them, to adapt to the needs. These goods are called economic (or economic). The well-being of people depends on the possession of these benefits, therefore they are treated carefully, economically, prudently.
Goods are a specific form of economic good, i.e. products of labor created for exchange (sale).

Production forms the material basis of the economic system. In the process of production, the factors of production are combined in a certain combination in order to create material wealth and their subsequent implementation. The concept of "factors of production" is often identified with the category of economic, or production, resources. However, there is still a difference between them.

Factors of production are the resources used in production, on which the volume, assortment and quality of products depend. Traditionally, the factors of production are divided into three categories: land, labor and capital.

Land as a factor of production is a natural gift used in the production process. As a factor of production, land has several meanings:

denotes all natural resources used in the production process (land itself used for agricultural land or for the foundations of workshops, factories, houses, for laying roads; energy resources supplying buildings with fuel for industrial and non-industrial purposes and machines). In a broad sense, land is all natural resources used in production, including minerals, water resources, forests;

in some sectors (agriculture, mining, fishing, forestry) land is an object of management. It acts both as an object of labor and as a means of labor. This means that the labor used is aimed at cultivating the land in order to achieve the desired results (object of labor), and its fertility and other qualities (location, availability of natural resources) are an independent means of labor;

in economics, land is an object of property, public or private. The owner of the land may not be directly involved in production, but in one way or another provides his land for public needs.

Capital as a factor of production is capital resources, i.e. durable goods intended for the production of other goods. Capital goods include buildings and structures, machine tools, computers, machines and much more.

Labor is the time spent by people on production, or the working time of that part of society that is directly involved in the labor process, i.e. purposeful socially useful activity. Labor is characterized by such indicators as the number of employees, the structure of those employed in production, and the level of qualification. Labor as a socially useful activity can be described by the concepts of "productivity" and "labor intensity".

In modern economic theory, entrepreneurship is singled out as a special factor of production, i.e. a special area of ​​activity aimed at organizing production, requiring special knowledge and decision-making skills taking into account market conditions, the ability to take risk and minimize it in specific ways. Entrepreneurship as an economic phenomenon has not always existed. It arises at a certain historical stage in the development of society and coincides with the formation of capitalism. Entrepreneurship is associated with a certain type of economic system.

There is a desire to consider information as a separate factor of production, since the adoption of any market decisions is impossible without modern and reliable information.

The production process as the interaction of its factors testifies to the technological characteristics of production. The technology includes the determination of the content, sequence and direction of individual production processes.

The difference between production factors and production resources is that economic resources are a broader concept than production factors. Resources are those natural and social forces that can be involved in production, and factors of production are an economic category that denotes the resources actually involved in the production process. In other words, factors of production are productive resources.

Economic resources are also divided into several groups:

1) natural - potentially suitable for use in production, natural substances and forces, among which there are inexhaustible (for example, wind power) and exhaustible resources. Exhaustible resources include renewable (say, timber) and non-renewable (oil reserves);

2) material - all means of production created or drawn in finished form from nature by man;

3) labor - the population of working age, which in the resource aspect is assessed according to three parameters: socio-demographic (sex, age, nationality, population density), professional qualification and cultural and educational;

4) financial - funds that the company directs to the organization of production;

5) information - information and its carriers; means of collecting, accumulating, storing, transforming, transmitting and consuming information used not only in the production of knowledge, but as an essential element of both productive forces and production relations.

The significance of certain types of resources changed as the transition from pre-industrial to industrial and post-industrial technology progressed. In pre-industrial society, priority belonged to natural and labor resources, in industrial society - to material resources, in post-industrial society - to intellectual and information resources.

Natural, material and labor resources are inherent in any economic system, so they are called basic; the financial resources that arose in market systems began to be called derivatives. Purposeful work with information resources has become widespread only in the last 50–60 years, although their use has always taken place. Currently, they play a special role in the formation of the market structure of the economic system and its functioning.

Economic resources (factors of production) can be used efficiently or inefficiently. Efficiency refers to the best use of society's resources to meet the needs and wants of the people. It is generally accepted that an economy works efficiently if it makes full use of available limited resources with the maximum possible result. The economy of a country works efficiently if it is impossible to improve the situation of one person without worsening the situation of another. Otherwise, there are all grounds to consider it ineffective.

3.4. Production possibilities of the economy
and its boundaries. Production Possibility Curve

Any economic system must meet the needs of households, enterprises and the state. The degree of satisfaction of needs depends on how fully the resources available in society are used, how effectively they are used as factors of production.

Society's resources are always limited. The same resources are used in different ways. For example, a society (state) can dispose of its land (agricultural purpose, industrial construction, military training ground, etc.), finances, and labor force in different ways. Under production conditions, for example, wood can be used in different ways: to make paint, paper from it, to enclose a repair shop. The same wood can be used in various ways in the household: as an element of home decoration (parquet), furniture or simply as firewood.

Limited resources mean limited opportunities for their use. At the same time, limitation can be divided into absolute and relative.

Absolute scarcity means the insufficiency of productive resources to simultaneously meet the needs of all members of society. If the circle of needs is narrowed, then the limited resources will become relative. Consequently, limited resources directed to satisfy unlimited needs reveal their absolute limitations, but the same resources turn out to be quite sufficient to satisfy limited needs, i.e. resources in this case are relatively limited.

It was possible to resolve the issue due to the choice of needs to be satisfied in the first place, and the definition of those whose satisfaction can be postponed. Thus, the absolute scarcity of resources has become relative. The scarcity of resources implies the need for choice. If the scarcity of resources were absolute, then choice would be impossible. If there were no resource constraints, then choice would be unnecessary. The relatively limited resources used in production are economic resources. Making a choice, the economic entity thereby prefers one or another variant of the use of resources.

The problem of choice can be simplified by considering an economy that produces only two types of goods - weapons and food. We will consider the whole variety of possible quantitative combinations of these groups of goods on a graph called the production possibilities curve (CPV), or the production possibility line (LPL).

Rice. 3.1. Production Possibility Curve

Let's build a graph, the y-axis of which will show the conditional values ​​​​of weapons production (B), and the abscissa axis - the possible volumes of food production (PP) (Fig. 3.1). Point A, which closes segment OA, will show the maximum possible production of weapons, provided that society directs all resources only to it, completely abandoning the production of food (3.5 conventional units). Similarly, point B shows another extreme case: all resources are directed to food with zero production of weapons (4 thousand sets).

The convex ACDEB curve shows the totality of all possible options for the production of our chosen goods - weapons and food - with available (used) economic resources. So, at point C, 3 conventional units are produced. units weapons and 2 thousand sets of food, at point D - 2 units. of the first product and 3 thousand sets of the second, at point E - 1 unit, respectively. weapons and 4 thousand sets.

The configuration of the production possibilities curve can vary somewhat, as can be seen in the following graph (Fig. 3.2).

A

b

Rice. 3.2. Possible configurations
production possibilities curve

Knowing the types of goods, the number of which is plotted along the ordinate axes, and the chosen scale, we can say that graph 3.2a shows the KPV of a society that devotes most of its resources to the production of weapons, and graph 3.2b shows the KPV of a society that prefers to produce food. Despite the differences, the production possibilities line always appears as convex with respect to the origin (with varying degrees of steepness).

The production possibilities curve marks the limits of the maximum possible simultaneous production of two types of goods with the full use of limited production resources. Points C, D and E in fig. 3.1 show the maximum possible simultaneous production of both types of goods. The model represents the full use of resources, therefore, an increase in armament can only be achieved by reducing the production of food, and vice versa.

We emphasize that the line of production possibilities is built under the condition of full use of economic resources (land, capital, labor, entrepreneurial abilities). This means that at a given level of production and available technology, there are no resources to increase the volume of production. The choice is given by the configuration of the curve, and only at the checkpoint can the desired variant be found.

If we turn to points F and F 1 (see Fig. 3.2), we find that in both cases they are inside the production possibilities frontier, and their coordinates show the volumes of output of both types of goods, which are clearly less than the possibilities of society. Consequently, economic resources in this case are not fully used (there is unused, "free" capital, unused land and unemployed labor resources), i.e. there are significant reserves to increase production.

Points H and H 1 , on the contrary, are outside the production possibilities, and, consequently, the production volumes corresponding to them are unattainable with this technology. The question arises: under what conditions can the points H and H 1 be reachable, i.e. turn out to be points on the production possibilities line? In answering this question, it should be borne in mind that not only needs are constantly growing, but also the production capabilities of society. This is due to technological, economic and social progress. As a result, the production possibility frontier is constantly being pushed back. Similar situations are shown in Fig. 3.3.

A

b

V

Rice. 3.3. Options for shifting the production possibilities line

Rice. 3.3a, 3.3b and 3.3c show different options for economic growth. On fig. 3.3a, due to economic growth, the production possibilities curve shifted parallel to the first CPV. As a result, the increase in the production of both armaments and consumer goods occurred proportionally.

Rice. 3.3b shows the situation when the increase in production volumes occurred mainly due to the growth in the production of consumer goods, and fig. 3.3c - the case when the increase in the production of armaments grows at a faster rate than the production of commodities with an increase in both. In the first case, there was a uniform increase in all resources, in the other two, the increase in various elements of production resources was uneven, and therefore the change in the production possibilities curve acquired an asymmetric form.

In all cases, a change in the position of the checkpoint, i.e. expansion of the boundaries of production possibilities, is the result of the development of production, its growth. It is achieved in two ways: either extensive (due to the quantitative increase in existing production factors), or intensive (due to the introduction of new technology).

Efficiency means that the resources of the economy are used in a way that best meets the needs of people. Production efficiency is one of the most important aspects of all economic efficiency. Efficient production is considered to be such a production in which the largest volume of product is produced using the available factors of production. If this condition is not met, production is inefficient, i.e. wasteful, uneconomical in the use of relatively limited natural resources.

3.5. Production Capabilities
and opportunity cost

An economy located on the production possibilities frontier always chooses between the maximum volumes of goods. Let's go back to our example. Let us suppose that this choice is to be made between the production of armaments and the production of foodstuffs.

Any chosen option makes other options impossible, i.e. the loss of any other option is inevitable. The already chosen combination of production of commodities and armaments makes other options that were possible unattainable. Failed opportunities in economic theory are called opportunity costs (opportunity cost). There may be quite a lot of alternative possibilities, and among them there may be those that would bring higher benefits if the choice was made on them. Therefore, we can talk about lost profits.

Opportunity cost (opportunity cost) is not the actual consumption of resources, but the potential loss of those goods that could be produced from the resources used, but with a different use of them. If for some reason there is no alternative, then there is no lost profit.

Movement along the production possibilities curve, i.e. analysis of various selected points on the PPV helps to determine opportunity costs (Figure 3.4).

Rice. 3.4. Production Possibility Curve
and opportunity costs

Recall that on our production possibilities curve, conventional units of weapons are plotted along the y-axis, and foodstuffs (thousand sets) are plotted along the abscissa. Let's assume that we are moving along the checkpoint from the left-up to the right-down. The first segment of our journey is from point A to point B. Point A characterizes the situation in which society spends all its resources on armaments. In order to produce food, it is necessary to give up a certain number of weapons and direct the released resources to the production of food.

Suppose a society refuses 1 unit. weapons and instead of 8 units. produces only 7. Thus, we have moved from point A to point B. The graph shows that when making such a decision, it turns out to be possible to produce an additional 4 thousand sets of food at once. In this case, the opportunity cost can be expressed as:

1 conv. units weapons = 4 thousand sets of software,

1 thousand sets of PP = 1/4 conv. units weapons.

We take the next step from point C to point D. Reduction of weapons by 1 unit. (up to 5 conventional units) will increase the production of PP by 1 thousand sets. Alternative cost on this segment:

1 conv. units weapons = 1 thousand sets of software,

1 thousand sets of software = 1 arb. units weapons.

Thus, each subsequent point can be analyzed sequentially. Let's take another step - move from point E to point F. Weapons production is reduced by another 1 unit. - from 4 to 3, but food production here increases only by 0.5 thousand sets. The opportunity cost in this case is:

1 conv. units weapons = 0.5 thousand sets of software,

1 thousand sets of software = 2 conv. units weapons.

At the last stage of our movement (from point G to point H), we find the following opportunity costs:

1 conv. units weapons = 0.25 thousand sets of software,

1 thousand sets of software = 4 conv. units weapons.

When moving along the production possibilities line towards the abscissa axis, the opportunity costs of production of PP increase, and approaching the ordinate axis (reverse movement) demonstrates an increase in the opportunity costs of armaments. In the first case, this means that each additional thousand sets of submachine guns costs more and more for society (it is necessary to abandon an increasing number of conventional weapons). The opposite movement will show a rise in the cost for society of each additional unit of weapons, since it is necessary to consistently abandon an increasing number of sets of PP.

In other words, as we approach the coordinate axes, opportunity costs increase, i.e. The law of increasing opportunity cost applies. This law should be taken into account both by society as a whole and by each of its subjects.

The closer to the edges of the production possibilities line, the more the opportunity cost rises, which becomes exorbitant as it approaches the maximum. This means that production efficiency drops. We are faced with the other side of increasing opportunity cost: as the production of a particular product is maximized, the efficiency of resource use decreases.

This pattern operates in conditions of limited production time and forces any manufacturer to look for ways to increase production efficiency.

We started our analysis by considering two extremes: out of available resources, a society can produce either 8 conventional units. units weapons, or 8 thousand sets of software. There are a large number of combinations between them, reflecting their combination. There is a kind of transformation of weapons into food, and vice versa. Transformation does not occur physically, but through the movement of economic resources from one use to another. Increasing production capacity overcomes the limitations of the CPV and signifies a process of economic growth.

In economic theory, one of the main factors in changing consumer demand in the market is the actual presence or absence of goods.

Benefits are means that can satisfy the various needs of a person and society as a whole.

Some of them are available in almost unlimited quantities (for example, water, sun, air), while others are in a limited amount. The latter are called economic goods.

There is a certain classification of economic goods, represented by such goods as:

1. short-term - these are single-use goods (food);
2. long-term - these are benefits used by a person repeatedly (clothing);
3. real goods are those goods that are available at the moment;
4. future are the benefits expected in the future;
5. direct - these are goods aimed only at consumption;
6. indirect - these are the benefits that were created to accompany the production process;
7. fungible - these are the benefits that are represented not only by consumer goods, but also by resources used in the production process (substitute goods);
8. Complementary goods are those goods that can satisfy the needs of a person or society only in combination with each other.

In order to create economic benefits, it is necessary to use resources in the production process. Resources are the tangible and intangible elements involved in the production process.

There are several types of resources:

1. natural resources are natural goods used in the production of goods and services (land, minerals, forests, etc.);
2. human resources are the physical and mental efforts that an employee spends in the production process;
3. capital resources are factories, machines, tools, as well as money spent on their acquisition;
4. Entrepreneurial resources are the managerial skills of people that are necessary to organize the production process.

But, unfortunately, all resources are limited. Natural resources are limited due to their exhaustibility. Labor resources are also limited by the physical and mental capabilities of the individual, but are capable of growth. On the one hand, labor resources are limited quantitatively - by the number of the able-bodied population of the country. On the other hand, they can grow qualitatively as the level of education of workers increases, their qualifications improve, etc. Capital resources are limited by their service life. Entrepreneurial resources are limited by the abilities of people, which is why a person cannot produce an infinite number of economic goods.

In society, there must constantly be a uniform distribution of resources between various sectors of the economy in order to produce certain required types of economic benefits. So, if a large amount of resources is involved in one sector of the economy, then other sectors will get less of them.

Those resources that are involved in the production process are the factors of production.

Consider their main types:

1. Earth- these are natural benefits used in the production process (air, forest, minerals, etc.); land is a limited resource, a fee is charged for it, which is called rent;
2. work- these are the physical and mental efforts that a person uses in the production of goods and services; a person agrees to realize his ability to work for a payment, which is called wages;
3. capital is expended in the process of production, hence it will be made available for use at a price called interest on capital;
4. entrepreneurship brings together in the production process land, labor and capital and receives for the risk and effort invested in business, a payment called profit (and in case of failure, the entrepreneur alone bears all the losses).

Most visually, the types of resources can be represented in the form of a figure.

Rice. 1. The main types of production resources and income from their use

Factors of production can be owned, managed and used by individuals, firms or the state.

Since resources are limited, an important issue arises before the individual and society - the issue of choice. Often a person does not have the opportunity to satisfy his needs, or, conversely, there is an opportunity, but there is no need. Even in everyday life, you can face this economic dilemma, for example, go to the movies or visit a hairdresser, eat ice cream or a chocolate bar. In economic theory, this task is manifested in the need to choose between alternative goods: which should be produced and which should be discarded. By releasing, for example, the maximum number of bicycles, it will be necessary to limit the production, for example, of scooters. This brings us to the concept of production possibilities. Production Capabilities- this is the maximum amount of goods or services that can be produced in a certain period of time with given resources and technologies. At the same time, it should be taken into account that resources in the production of these goods or services are used most efficiently and fully.