Every production is organised by combining land labour physical capital and human capital explain
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There are four requirements for production.
- The first requirement is land and other natural resources like water, forest, minerals
- the next requirement is Labour ie, people who will do the work. Some production activity require highly specialised workers whereas other requires manual work.
- Next is physical capital, i.e. varies inputs required at every stage of production. These include tools machines and buildings (fixed capital ) and raw material and money in hand (working capital)
- we will require the skills and enterprise to combine land Labour and physical capital to produce an output. It is called human capital
Thus every production is organised by combining land, Labour, physical capital and human capital which are know as factors of production.
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Fixed capital includes those assets which can be used over many years in the process of production like machines in factory, building, tools etc. ... The above points clearly show that every production is organized by combining land, labour, physical capital and human capital.
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