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Economic Resources and

the Basic Questions

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Economic Resources
We need resources in order for us to survive in
everyday living. We all know that there are
many available resources in the market.
H o w e v e r, s o m e o f t h e r e s o u r c e s a v a i l a b l e
cannot satisfy our wants.

In economics, there are four classifications of

r e s o u r c e s : l a n d , l a b o r, c a p i t a l , a n d
entrepreneurial skills. These are the factors of
production used to produce goods and services.

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 The country is rich with natural
Land
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resources. According to Philippine
Government Website, Philippines is
composed of 7,641 islands with
Land refers to the natural
terrestrial territory of more than
resources. It includes materials
300,000 square kilometers. Since
f o u n d i n f o r e s t , w a t e r a n d a i r.
the country is an archipelago, it is
Minerals, oil, and petroleum are
s u r r o u n d e d b y b o d i e s o f w a t e r. A
also part of this economic
total of 2,400 fish species found
resource. Once this resource
w i t h i n t h e t e r r i t o r y. M o r e o v e r , t h e
has been used, the owner of
country has fertile, arable lands,
the land will receive a payment
diverse flora and fauna, extensive
called rent.
coastlines, and rich mineral
deposits. The Philippines’ primary
According to Philippine History source of livelihood is its fertile
Organization, the country’s land. The country’s main agricultural
mineral deposits are estimated at production are rice, corn, banana,
21.5 billion metric tons for metal. sugarcane, pineapples, coconut,
Nickel is the abundant mineral in abaca, and tobacco. Before the Rice
t h e c o u n t r y, f o l l o w e d b y i r o n , a n d Ta r i f f i c a t i o n L a w e n a c t e d , t h e r e a r e
c o p p e r. G e m s , p r e c i o u s m e t a l s , less rice supply in the market which
and copper are the top export
products of the country in 2019. a r e t o o p r i c e y. T h i s i s a n e v i d e n c e
Meanwhile, there are 19.3 billion that the country is facing rice
metric tons of non-metal. Cement, s h o r t a g e . H o w e v e r, t h e c o u n t r y i s
lime, and marble are top non- one of the top exporters of banana 3
m e t a l p r o d u c t s o f t h e c o u n t r y. and coconut around the world.
Labor
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This economic resource refers to human Philippines is tagged as labor-intensive
capital. Laborers used their physical effort country. Meaning, the country relies on its
to produce goods and provide services. human capital. The rate of population in
They are receiving an income called wage the country is increasing, this is the
for the work done. Wage depends on the reason why we have a lot of people who
worker’s ability in terms of education, work are ready for a job. Is it good for a country
experience, and training. to have a bigger population? The answer
depends on how the country uses its
human capital. There are many workers
available in the market, however, the job
As we have discussed in the previous does not suit for the skills that the
lesson, Adam Smith emphasized that if company is looking for. Hence, labor
the country wants to prosper, there’s a supply cannot suffice the labor demand
need to divide the task among its that would result to unemployment. As of
specialization. The management should July 2018, data showed that 42.982
utilize effectively the specialized skills of million Filipinos were part of the labor
an individual. force and 94.59% or 40.659 million were
employed (PSA).

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Capital
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It refers to the man-made materials used According to the April 2020 Report of
in production. It also serves as an Philippine Statistics Authority (PSA), the
investment in capital goods for future country’s top export products are
use. Capital is categorized as fixed and electronics such as integrated circuits,
working capital. Fixed capital includes office machine parts, computers,
machineries, factories, buildings, and semiconductor devices, and electrical
equipment. Working capital refers to transformers.
finished goods or semi-finished goods
which will be utilized in near future.
Financial resources are also part of the
capital. The payment of the use of
capital is called interest.

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Entrepreneurial Abilility
It is also known as entrepreneurship. This
economic resource refers to an individual who
has the special skills needed to produce goods
and services. Entrepreneurs are the ones who
own the economic resources. They use their
skills in managing the resources, decision-
making for the business, and handling risks for
such economic situation. They receive an
income called profit after deducting the
p a y m e n t f r o m o w n e r s o f l a n d , l a b o r, a n d
capital. .

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Basic
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style
If the resources are unlimited, individual and
society could have whatever they want. With
this, scarcity is not a concern instead society
enjoys the resources at its optimum
s a t i s f a c t i o n . H o w e v e r, t h i s i s a n t i t h e t i c a l o n
w h a t i s h a p p e n i n g i n r e a l i t y. T h e p r i n c i p l e o f
scarcity-forces-tradeoff recognizes that
although human desires are unlimited, the
resources needed to fulfill it are scarce. The
scarcity forces individuals to make choices in
what to have and what to give up. The larger
and more advanced a society is, the more
numerous and complex these choices would be.
Paul Samuelson, America’s first Nobel Prize
winner for economics, drawn three basic
economic questions to allocate properly the
limited resources. Each society must answer
the economic questions depending on their
economic goals to address the desires of the
people.
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1.
ClickWhat to produce?
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No society can produce everything what its people might want
because scarcity exists. This raises the question: What goods and
services are most wanted and needed? For instance, due to global
pandemic, Philippines has a limited budget, should the government
produce more testing kits or provide more public goods to its
people? Should the government continue the lockdown or continue
the business activities? Should the government produce
technological devices or printed materials for the learners?

Economists must decide what to produce given the limited land,

l a b o r , a n d c a p i t a l . I n t r a d i t i o n a l e c o n o m y, t h e f o c u s i s o n p r o d u c i n g
b a s i c n e c e s s i t i e s l i k e f o o d a n d s h e l t e r . I n a d v a n c e d e c o n o m y, t h e r e
are more available resources which can be used for non-necessary
g o o d s , s u c h a s l e i s u r e a n d t e c h n o l o g y. I n a f r e e m a r k e t e c o n o m y,
production is determined by market forces. Businesses will provide
g o o d s a n d s e r v i c e s d e m a n d e d b y c o n s u m e r s . I n a m i x e d e c o n o m y,
with government intervention, the government may decide to
produce more public goods which are not profitable but do improve
economic welfare
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2. How to produce?
Economists must look for the best combination of economic
resources in such a way the production is effective and efficient.
For example in a free market, we all know all that Marikina City
is known of its shoe products. Some of the shoe businesses in
Marikina are still producing handmade shoes, while others are
u s i n g m a c h i n e s . H o w e v e r, w h i c h i s l e a s t - c o s t a n d m o r e e ff e c t i v e
s h o u l d a p p l y.

I n a m i x e d e c o n o m y, a g o v e r n m e n t m a y r e g u l a t e p r o d u c t i o n
methods to limit the negative externalities. There are many
f a c t o r s t o c o n s i d e r s u c h a s e n v i r o n m e n t , t e c h n o l o g y, a n d h u m a n
welfare before we decide on how to produce such product.

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3. For whom are good and

services to be produce?
This question will relate to the economic goals:
equity and fairness. It tries to answer: Who will
benefit of this product? Is there any specific
group of people who deserves this product? Are
all the constituents will get this product?

In a free market, goods are provided for those

w i t h t h e a b i l i t y t o p a y. T h i s m a y b e t h r o u g h a
simple exchange or in more advanced
economies through cash payments. In more
humane societies, we may seek to produce
goods and services for those who may not be
able to afford them.
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Thank You

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