Explain the four factors of production?
Answers
Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship. The first factor of production is land, but this includes any natural resource used to produce goods and services. ... Land resources are the raw materials in the production process.
The four factors of production are
1 Land :- It generally refers to all natural resources which are free gift of nature like forest ,mountain ,soil etc.Though land is a free gift of nature but its supply is less as compared to its demand that is why it is paid factor price .
2 Labour:- Any work whether manuel or mental which is undertaken for a monetary consideration is called labour .
3 Physical capital :- Physical capital refers to that part of man's wealth which is used in producing further wealth or which yields an income .
4 Enterprenuer :- Entrepreneur is a person who undertakes risk and bear uncertainty to produce a commodity .An enterpreneur combines his factors of production like land, labour, raw material, capital etc.utilizes services of labour, land, and capital and converts the raw material into desired output and whatever a firm earns by selling the output gets divided among factors of production in terms of rent, wages, interest and profit .