Economics Resources: Definition, Types and Characteristics

Economic resources is a concept in economics that is usually used alongside human wants, scarcity and choice. Economics students learn about economic resources to prepare them for future roles in management, which involves planning and management of scarce resources to meet unlimited human needs.

Economic resources are ingredients that are available for providing goods and services in order to certify the human wants. A resource must be scarce and have money value. Businesses and individuals that thrive are able to control available resources to generate income or meet their needs. Economic resources are used interchangeably with factors of production to mean inputs that go into the production process to create new products or services. Examples of economic resources include land, labour and capital, which are combined in the production process to turn inputs into output.

Characteristics of economic resources

  • Scarce/Limited in Supply: Economic resources are scarce in relation to their uses. There are few economic resources available for use, compared to the needs for which they are required. Limited resources mean that there are few inputs needed to produce goods and services.
  • They have a monetary value: Economic resources can be bought and sold in the market in exchange for money. Saying an economic resource has monetary value means that it comes at a cost or price.
  • They have alternative uses: Economic resources can also be used in different ways. For example, land can be used to build hotels or practice agriculture. Using an economic resource for one particular purpose excludes it from being used for another purpose.
  • Unevenly distributed: unequal distribution of economic resources occurs when few people own them. Poor people have less economic resources than rich people. For example, a worker may not have land on his name, while a Cabinet Minister has a thousand hectares of land.
  • Utility: Economic resources have utility – this means that they satisfy human wants. Utility in economics means that something is useful or profitable. Economic resources are beneficial to users because they have monetary value and can be used to produce the goods or services that people want.
  • Can be combined to produce goods and services: Two types of economic resources can be used together to produce goods and services. For instance, land, labour and capital can be combined to produce crops.
  • Transferrable from one place to another: not all products can be transferred from one geographic location to another; but most of them can. Land is not transferrable, but machines and human resources can be moved.

Types of Economic Resources

There are three main ways of classifying economic resources namely:

  1. Natural Resources: They are also called the gifts of nature and are held in trust by the government for the citizens. They include; forest, river, mountain, minerals and lakes.
  2. Artificial Resources: They are created by people through various production activities e.g. machinery, tools, roads, railway, airport, dams, bridges, harbours, soaps, books.
  3. Human Resources: They are mental/physical efforts offered by people to the production society. These efforts cannot be separated from their providers e.g. teaching, health services, mechanics, carpentry, engineers etc.
  4. Man Made Resources refers to anything created by man to assist in further production such as tools, equipment’s, roads and buildings etc.

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