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June 17, 2018 

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VERY LONG RUN, MICROECONOMICS: A production time period in which all inputs are variable, including those under control of the firm and those beyond the control of the firm. During the very long run, not only are the labor, capital, land, and entrepreneurship inputs variable, but so too are key production inputs such as government rules, technology, and social customs. This is one of four production time periods used in the study of microeconomics. The other three are short run, long run, and very short run.

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LAND:

The naturally occurring resources used in the production of goods and services, including the land itself; the minerals and nutrients in the ground; the water, wildlife, and vegetation on the surface; and the air above. Land also includes the productive dimensions of space and accessibility. This is one of four basic categories of resources, or factors of production. The other three are labor, capital, and entrepreneurship.
Land is, first and foremost, the source of all materials used to produce tangible goods. This resource category includes everything that is transformed by labor, capital, and entrepreneurship into more valuable goods. Without land, there are no goods.

Three Productive Dimensions

Land actually has three productive dimensions. In addition to the naturally occurring materials, land also provides space and accessibility.
  • Materials: The obvious dimension of land is the provision of naturally occurring materials, the materials that provide the "substance" of tangible products. The materials needed to build a house, for example, include lumber for the walls, asphalt shingles for the roof, plastic pipe for the plumbing, and copper wire for the electrical system. All of these materials originate with the land--vegetation growing on the land, and minerals found in the ground. No land, no raw materials, no goods.

  • Space: A second, not so obvious, dimension of land is space. In other words, land provides a place to "put things." Every THING needs to be some PLACE, with emphasis on the word PLACE. Land is the resource used for this storage function. The spatial storage aspect of land is often augmented with capital (for example, a warehouse), but it begins with land. Land, for example, provides the space, the surface area, to construct a house.

  • Accessibility: The third, and also somewhat obscure, dimension of land is location or accessibility. Everything is located relative to other things. Some are closer, some are farther away. Closer locations require fewer scarce resources (and thus incur less opportunity cost) for transportation. Because resources are used to transport as well as to transform, accessibility and close location reduce the opportunity cost of transportation. A house that is located closer to school, work, and shopping is usually preferred because transportation cost is less.

Natural Resources

The materials of land are also commonly termed natural resources. This phrase serves to emphasize the "naturally occurring" aspect of materials used for production, in contrast to artificial or manufactured capital resources. These materials naturally exist on the surface of the land, under the surface of the land, and above the surface of the land.
  • On: Naturally occurring resources on the surface of the land include water (rivers, lakes, and oceans), vegetation (trees, bushes, and grass), and wildlife (rabbits, deer, fish, and crawling insects).

  • Under: Naturally occurring resources under the surface of the land include mineral deposits (iron ore, bauxite, and diamonds), energy reserves (petroleum, natural gas, and coal), soil nutrients (phosphorus, nitrogen, and potassium), wildlife (gophers and earthworms) and ground water.

  • Above: Naturally occurring resources above the surface of the land include air (oxygen, nitrogen, and assorted trace elements), precipitation (rain, snow, sleet, and hail), solar radiation (sunshine), wildlife (birds and flying insects), atmospheric conditions (the ozone layer and greenhouse gases), and outer space (meteors, twinkling stars, and a full moon).
A few moments of contemplation should provide examples of how some or all of these resource are valuable productive inputs. Rivers have long provided a means of transportation. Earthworms are commonly used as fishing bait. Sunshine provides energy for plant growth. Young couples find romance on a warm summer day gazing at the twinkling stars and a full moon.

Land or Capital

When economists first identified the basic resource categories a few centuries back, farm production provided the basic model of economic production. People (labor) used tools (capital) to plant, then harvest crops from the soil (land). The farmer then provided the organization duties (entrepreneurship). While the land resource category would seem relatively straightforward (land is land), a modern interpretation of resources suggests that the distinction between land and capital is not always simple and straightforward.

Consider a few examples.

  • Farmland: Farmland provides an excellent place to locate growing crops. However, the land itself is as much, if not more, a factory than a natural resource. Like a modern factory, inputs are "brought in" to the farmland (seeds, fertilizers, pesticides, irrigation water) and outputs are "shipped out" from the farmland (harvested crops). Like a factory, farmland provides the structure used for production. The land just happens to be a lot flatter.

  • Dairy Cows, Chickens, and Sheep: Cows used for milk production, chickens used for egg production, and sheep used for wool production also operate much like factories. Inputs (feed, water) are given to the animals and outputs (milk, eggs, wool) are produced. Like other capital goods, cows, chickens, and sheep are used to produce several goods. The difference is that, unlike traditional factories, these animal factories are alive.

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Recommended Citation:

LAND, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: June 17, 2018].


Check Out These Related Terms...

     | factors of production | labor | capital | entrepreneurship | natural resources |


Or For A Little Background...

     | scarcity | limited resources | opportunity cost | resource allocation | economic resource |


And For Further Study...

     | second estate | ownership and control | property rights | private property | private sector | capitalism | fixed input |


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