Give the meaning of factors of production with examples.
Answers
Answer:Factors of production are the resources people use to produce goods and services; they are the building blocks of the economy. Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship
Answer:
Factors of production is an economic term that describes the inputs used in the production of goods or services in order to make an economic profit. These include any resource needed for the creation of a good or service. The factors of production include land, labor, capital and entrepreneurship
《Land》
It refers to all natural resources. All natural resources either on the surface of the earth or below the surface of the earth or above the surface of the earth is Land.
One uses the land to produces goods. It is the primary and natural factor of production. All gifts of nature such as rivers, oceans, land, climate, mountains, mines, forests etc. are land.
The payment for land is rent.
《Characteristics of Land as a Factor of Production》
☆The land is a free gift of nature.
☆The land has no cost of production.
☆It is immobile.
☆The land is fixed and limited in supply.
《Types of Land》
☆Residential
☆Commercial
☆Recreation
☆Cultivation
☆Extraction
☆Uninhabitable
《Labor》
All human effort that assists in production is labour. This effort can be mental or physical. It is a human factor of production. It is the worker who applies their efforts, abilities, and skills to produce.
The payment for labour is the wage.
《Characteristic》
☆It is a human factor.
☆One cannot store labour.
☆No two types of labour are the same.
《Types of Labor》
☆Unskilled
☆Semi-skilled
☆Skilled
☆Professional
《Capital》
Capital refers to all manmade resources used in the production process. It is a produced factor of production. It includes factories, machinery, tools, equipment, raw materials, wealth etc.
The payment for capital is interest.
《Characteristics》
☆Capital is a manmade factor of production.
☆It is mobile.
☆It is a passive factor of production.
《Types of Capital》
☆Fixed
☆Working
☆Venture
《Entrepreneur》
An entrepreneur is a person who brings other factors of production in one place. He uses them for the production process. He is the person who decides
▪︎What to produce
▪︎Where to produce
▪︎How to produce
A person who takes these decisions along with the associated risk is an entrepreneur.
The payment for land is profit.
《Characteristics》
☆He has imagination.
☆He has great administrative power.
☆An entrepreneur must be a man of action.
☆An entrepreneur must have the ability to organize.
☆He should be a knowledgeable person.
☆He must have a professional approach.
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