Labor and Capital

Labor refers to the work effort and skills that people contribute to produce goods and services, including physical and mental effort. Capital consists of the tools, machines, buildings, and technology used in production, which help increase efficiency. In an economy, both labor and capital are essential: labor provides the human input, while capital enhances productivity. Businesses combine these resources to create products, aiming for efficiency and profit. Essentially, labor is the human work force, and capital is the physical and technological assets that support and amplify that work.