READING DRILLS

1. Practise the pronunciation of the following words:

a) stress the first syllable:

capital, factory, durable, input, output, textile, money, presence, process, profit, firm, innovative, effort, item, suffer, loss;

b) stress the second syllable:

equipment, produce, production, economy, create, assemble, distinguish, financial, unique, construction, require, employ, successful, return, reward;

c) stress the third syllable:

education, educating, managerial;

d) stress the fourth syllable:

organizational, entrepreneur, entrepreneurship.

Text B

The third factor of production is capital — the tools, equipment and factories used in production of goods and services. It is a produced factor of production, a durable input which is itself an output¹ of the economy. For example, we build a textile factory and use it to produce shirts, or assemble
a computer and then employ it in educating students.

As noted earlier, such items are also called capital goods². This is to distinguish them from financial capital³, the money used to buy the tools and equipment used in production.

Capital is unique in that, it is the result of production. A bulldozer may be an example of capital goods used in construction. At the same time⁴, it was manufactured in a factory which makes it the result of earlier production.

When the three inputs⁵— land, labour and capital — are present, production or the process of creating goods and services, can take place. Even the production of the service called education requires the presence of land, labour and capital.

Entrepreneurship, the managerial or organizational skills⁶ needed by most firms to produce goods and services, is the fourth factor of production. The entrepreneur brings together the other three factors of production — land, labour and capital. When they are successful, entrepreneurs earn profits⁷, the return or reward⁸ for the risks, innovative ideas and efforts put into the business. When they are not successful, they suffer losses⁹.