Money is not considered a capital good because it does not produce anything whereas tools, machinery and other equipment create parts to or whole sellable products. Entrepreneurial ability is an economic resource because whereas labor is mainly physical actions and some mental abilities, entrepreneurial ability combines labor with it’s counterpart’s capital and land. Entrepreneurial ability also requires someone to take initiative, make strategic business decisions, be innovative, and bear risk. Where those who contribute labor may produce the physical product, entrepreneurs are responsible for the business and its practices as a whole. As stated before, entrepreneurs take initiative, make strategic business decisions, innovate, and bear risk for new products and ideas.
Work Step by Step
Capital - Capital refers to tools, machinery, and other productive equipment, not money. Labor - Labor consists of the physical actions and mental activities that people contribute to the production of goods and services. Entrepreneurial Ability - A special human resource, distinct from labor, called entrepreneurial ability that performs several socially useful functions. These functions include taking initiative in combining the resources of land, labor, and capital to produce a good or a service. Making strategic business decisions that set the course of a product and its business. Innovation and commercializing new products, new production techniques, and new business organization. The entrepreneur also bears risk for all new products and ideas.