What are the four requirements of production? Explain them with examples.
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Answer:
There are four requirements of production of goods and services. These requirements are known as factors of production. These are : (i) Land: By land we mean not only the level surface but all gifts of nature which are amenable to human control, such as water, forests, minerals, etc. (ii) Labour: Manpower required to do the work. The mental and physical work done by people in an organisation comes under labour. (iii) Physical Capital: It means a variety of inputs required at every stage during production. They can be classified as: (a) Fixed capital: It includes tools, machines and building that can be used for production for many years. (b) Working capital: Money in land and raw material that has to be used in current products are included in working capital. (iv) Enterprise: It means need of knowledge and enterprise to put together all other factors of production and ability to sell the produce in the market. This is also called human capital
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