The understanding of a study of economics and human action in the marketplace has been greatly enhanced by a formula developed a number of years ago by economists at the American Economic Foundation.

This formula describes the processes that are involved in the production of any goods and services:

MMW = NR + HE x T

In other words, Man's Material Well-being (MMW) is equal to or the sum of Natural Resources (NR) plus Human Energy (HE) multiplied by Tools (T).

Natural resources consist of those materials and substances that exist in nature, and which by definition are not man-made.

Everything that man produces comes first from natural resources.  Man cannot live without them, nor can he yet produce these resources himself in their natural state.  He can only work with them to produce other things.

Natural resources may be anything existing within nature, such as trees, minerals, water, air, stone, animals, metals, and the like.

Human energy is what man adds to the equation in order to transform natural resources into other forms for his use.