Describe the four factors for production that influence a country’s standard of living and ultimately a person’s quality of life. Explain why each of these factors is the driving force behind economic success.
The four factors that influence a country's total production or GDP (gross domestic product) and ultimately the standard of living and consequently a person's quality of life are:
1) Natural resources: all the material/resources available naturally, e.g. water, air, light, etc.
The presence of natural resources led to cheaper production of goods compared to nations that are dependent on its import, making the nation more competitive in the international market.
2) Investment in human capital: the skills, education, talents and abilities that human workers possess and the values they bring to the economy.
Higher investment in human capital will lead to a better and more technically advanced workforce and thus higher production and more efficient and productive use of natural resources.
3) Investment in capital goods: the goods present in the nation and the goods/services that are produced from them, e.g., tools, technology, equipment, etc.
The higher the capital goods, the greater the production—and not just in quantity but quality as well.
4) Entrepreneurship: risk-takers and innovative people who may lead to new products/services or more optimized production of goods/services.
Entrepreneurship creates jobs and optimizes the production of services/goods, generating new offerings and thus enhancing production levels. It also enriches human capital.