Explain the four factors of production with examples.
Answers
Four Factors of production⤵⤵
➡ Land :- This includes any natural resource used to produce goods and services.Some common land or natural resources are water , oil , copper, natural gas, coal and forests .
➡ Labour:- Labour is the effort that people contribute to the production of goods and services. Labour resources include the work done by the waiter who brings Your food at a local restaurant as well as the engineer who designed the bus that transports you to school .
➡ Capital:- Think of capital as the machinery, tools and building humans use to produce Goods and services. some common example of capital include hammers , forklifts, conveyer belts , computers and delivery vans .
➡ Entrepreneurship:- an entrepreneurship is a person who combines the other factors of production- land , labour and capital - to earn a profit .
Answer:
The four factors of production are:
(i) Land – It denotes the natural resources like air, water, soil, etc. The payment that is paid by the firms to acquire these services is called rent.
(ii) Labour – It refers to the physical and mental effort required to do a work. For example, engineer, manager, worker, etc. The payment made to the labour in exchange of his/her services is called as wage.
(iii) Capital – It refers to the monetary investments and physical and tangible investments like machinery, buildings, technology, tools, etc, which assists in production process. The payment received in exchange of these services is called interest.
(iv) Entrepreneur – It refers to the individual who undertakes the risk to organise the production process. Entrepreneurs are the risk takers and often are the innovators of new techniques. They receive profit in exchange of their entrepreneurship. The remunerations paid to the factors of productions are called factor payments or factor incomes. These are the aggregation of rent, wage, interest and profit .
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