An economic resource is a right by the reporting entity that has the potential to produce economic benefits.
An economic resource in general has the form of an asset. This information is provided in the financial position.
Potential to produce economic benefits – Within an economic resource, a feature that already exists and will produce economic benefits in at least one circumstance.
Factors of production
Land, labor, capital, and entrepreneurial ability which are used in the production of goods and services. They are economic resources because they are scarce (limited in supply and desired). Also called the factors of production.
What Is Scarcity?
Scarcity refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants.
This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible.
Any resource that has a non-zero cost to consume is scarce to some degree, but what matters in practice is relative scarcity. Scarcity is also referred to as “paucity.”
Economic resource 1: Land
Land is an economic resource that includes all natural physical resources like gold, iron, silver, oil etc. Some countries have very rich natural resources and by utilizing these resources they enrich their economy to the peak.
Such as the oil and gas development of North Sea in Norway and Britain or the very high productivity of vast area of farm lands in the United States and Canada. Some other developed countries like Japan have smaller economic resources.
Japan is the second largest economy of the world but reliant on imported oil.
Natural resources can fall outside the realm of scarcity for two reasons. Anything available in practically infinity supply that can be consumed at zero cost or trade-off of other goods is not scarce.
Alternatively, if consumers are indifferent to a resource and do not have any desire to consume it, or are unaware of it or its potential use entirely, then it is not scarce even if the total amount in existence is clearly limited.
However, even resources take for granted as infinitely abundant, and which are free in dollar terms, can become scarce in some sense.
Economic resource 2: Labor
The human input in the production or manufacturing process is known as labor. Workers have different work capacity. The work capacity of each worker is based on his own training, education and work experience.
This work capacity is matters in the size and quality of work force. To achieve the economic growth the raise in the quality and size of workforce is very essential.
Economic resource 3: Capital
In economics, Capital is a term that means investment in the capital goods. So, that can be used to manufacture other goods and services in future.
Following are the factors of capital:
It includes new technologies, factories, buildings, machinery and other equipment.
It is the stock of finished goods or components or semi-finished goods or components. These goods or components will be utilized in near future.
New features of capital building, machinery or technology are commonly used to improve the productivity of the labor.
Such as the new ways of farming helps to enhance the productivity of the agriculture sector and give more valuable jobs in this sector which motivates people to come out for work.
It is a stock of capital that is used to maintain the whole economic system. Such as roads, railway tracks, airports etc.
Economic resource 4: Entrepreneurship
The Entrepreneur is the person or individual who wants to supply the product to the market, in order to make profit.
Entrepreneurs usually invest their own capital in their business. This financial capital is generally based on their savings and they take risks linked to their investments.
This risk-taking can be rewarded by the profit of the business. Entrepreneurship is, thus, an important economic resource.
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