Question by Katie: The resources that contribute to the creation of wealth are known as:?
factors of production.
Answer by bvgopinath2001
Please prove me mathematically how can you create wealth. In double entry bookkeeping for every debit there should be credit of like amount. Assets should equal liabilities. I ask you, can you create debit without credit? Is double entry bookkeeping wrong?
We can add 5a and 3a. Answer is 8a. We can subtract 5a from 8a. Yes. Can we add 3a and 3b? Can we add 3kilometers and 5 hours? Can we subtract 4kilograms from 5 kilometer? If a is wealth and b is non-wealth, we can not add or subtract non-wealth to or from wealth. In simple words only wealth can be added to wealth and only wealth can be subtracted from wealth. This means that wealth (like mass and energy) can neither be created nor be destroyed but can be changed from one form to another. This is called Law of Conservation. Law of Conservation is the cause and Law of Equilibrium is the effect. The two laws together rule the universe. They are responsible for every law of every sciene.
Generally economist say wealth is created when a form of wealth that has value in use is changed into a form of wealth that has value in exchange. Example is photosynthesis. Here, carbon dioxide, soil moisture in the presence of chlorophyll using solar energy produce food. Carbon dioxide, soil moisture, chlorophyll and sunlight have value in use but they do not have value in exchange. Food has value in exchange. Scientifically this is not creation but value addition. In this meaning the answer to your question is factors of production i.e. land, labor, capital and entrepreneurship.
When wealth that has value in exchange is changed into wealth that has value in use we call it as consumption.
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