Question

The aim of production is to produce the goods and services that we want. There are

four requirements for production of goods and services.

The first requirement is land, and other natural resources such as water, forests, and

minerals.

The second requirement is labour, i.e. people who will do the work. Some production

activities require highly educated workers to perform the necessary tasks. Other

activities require workers who can do manual work. Each worker is providing the

labour necessary for production.

The third requirement is physical capital, i.e. the variety of inputs required at every

stage during production.

(a) Tools, machines, buildings: Tools and machines range from very simple tools such

as a farmer’s plough to sophisticated machines such as generators, turbines,

computers, etc. Tools, machines, buildings can be used in production over many years,

and are called fixed capital.

(b) Raw materials and money in hand: Production requires a variety of raw materials

such as the yarn used by the weaver and the clay used by the potter. Also, some money

is always required during production to make payments and buy other necessary items.

Raw materials and money in hand are called working capital. Unlike tools, machines

and buildings, these are used up in production. There is a fourth requirement too. You

will need knowledge and enterprise to be able to put together land, labour and physical

capital and produce an output either to use yourself or to sell in the market. This these

days is called human capital​

Answer 1

Explanation:

The essential inputs which are required for the production of goods and services are known as factors of production. For example, for the production of cloth, cotton-machine, labour and technology is required.