What are factors of production? Provide an example of each of the four factors of production. Make sure your answer is written in complete sentences thank you for helping❤:-)
Answers
Factors of production are the resources used by organizations to create products and services and contribute to the development of the economy.
Examples of each of the four factors of production are as follows-
- Land- The space for setting up production units and factories and can include plots of farms, blocks in a city.
- Labour- The people who convert the input to output like laborers, retailers, etc.
- Capital- The funds required to carry out the business activities like cash, reserves, assets, etc.
- Entrepreneurship- The man-force involved in developing the business and includes human capital.
Answer: Factors of production refers to the inputs that are used to produce goods and services.
Explanation: There are mainly four factors of production namely:
- Land
- Labour
- Physical Capital
- Human Capital
All four factors are used during different stages of production.
The first factor is Land, it includes all other resources that are on the earth's crust, ie, minerals, water, forests, land etc.
The second factor Labour or the workforce refers to people involved in different tasks for the purpose of production of goods or services.
The third factor is Physical Capital or simply capital. It includes machinery, raw material and all other capital investment used for production.
The fourth factor, Human Capital is different from labour as it does not refer to the workforce, but the knowledge and effort of an individual or a group of individuals that makes production possible by way of putting together and using all the other three factors.