need and importance of factors of production
Answers
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Answer:
The four requirements of production of goods and services are land, labor, physical capital and human capital.
1) Land -
Land is the physical place where all the economic activity takes place. Land plays an important part in production because land itself and the resources on it are usually limited.
2) Labor -
It seems obvious, but things cannot be produced unless someone makes them. So, labor is another important requirement of production of goods and services. Labor represents all the people that are available to transform resources into goods or services that can be purchased. Land is the physical and mental efforts of human beings used for the production of goods and services.
3) Physical Capital -
Physical capital refers to variety of inputs that are needed at different stages of production such as tools, machinery, finances, raw material etc.
4) Human Capital -
Human capital is the fourth requirement of production of goods and services. Human capital is the knowledge and effort that is put into arrange for the other requirements like land, labor and physical capital to start the production of goods and services.
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