Question

how are the various factors of production related to each other?
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Answer 1

Factors responsible for Production are

• Land It is a free gift of nature and can neither be created nor destroyed. But should not be misused since it limited.
• Labour It is a factor which helps in production. There are three types of labour - skilled, semi-skilled and unskilled.
• Capital It is a part which is invested. There are two types of capital namely physical and working capital.
• Entrepreneurs The person who is taking risk in starting up a business and or a company. Without human capital, all other resources are useless.

Land is a natural resource which provides the base for the agricultural sector. Now the agriculturist can either cultivate his/her own land or employ human labour if additional hands are required. He/She requires input and capital for fertilizers, pesticides as well as farm equipments. If he/she is having sufficient capital, one can invest it in building and nurturing one's farm. If one lacks capital, one can take a loan from a bank. The harvest cultivated can be utilized to repay the loan and interest back to the bank. All the following scenarios illustrate us the interdependence of different factors of production to us which come under the category of economic interdependence.

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