Economic Resources

If there are no resources, an economy cannot be sustained. In this lesson, you'll learn what economic resources are, the different types of economic resources, and why they are vitally important. A short quiz follows the lesson.

Definition of Economic Resources

Economic resources are the factors used in producing goods or providing services. In other words, they are the inputs that are used to create things or help you provide services. Economic resources can be divided into human resources, such as labor and management, and nonhuman resources, such as land, capital goods, financial resources, and technology.

Importance of Economic Resources

An economy is a system of institutions and organizations that either help facilitate or are directly involved in the production and distribution of goods and services. Economic resources are the inputs we use to produce and distribute goods and services. The precise proportion of each factor of production will vary from product to product and from service to service, and the goal is to make the most effective use of the resources that maximizes output at the least possible cost. Misallocation or improper use of resources may cause businesses, and even entire economies, to fail.

Human Resources

Labor is one of the classic factors of production, along with land and capital, discussed by economists for well over a century. Even in today's technologically advanced world, human labor is still needed to help process resources into products or to utilize resources to provide services. Different types of labor include production labor and service labor. An example of production labor is the classic factory worker. Service labor includes people involved in providing a service, such as doctors, lawyers, accountants, sales people, mechanics, and plumbers.

Management is another example of a human resource. As organizations became more complex with the onset of the Industrial Revolution, employees were required to oversee and manage the masses of workers engaged in the production process. Management is a resource that is used to facilitate efficient and effective production or operations of a business so that it can accomplish its goals. Rather than being directly involved in production or services, managers coordinate, monitor and direct employees engaged in the production or service. Examples of management include a direct supervisor all the way up to the president of a large multinational company.