Question

what are the major factors of production?among all these factors of production, which one is the most important?why​

Answer 1

Explanation:

Land involves natural resources labor is associated with human resources, capital includes manmade resources, and enterprise combines all the three factor, to carry out the production process. Therefore, all the four factors of production are equally important for the production activity of an organization.

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Answer 2

Explanation:

The resources (input) used to produce final products (output) are termed as factors of production.

In economic terms factors of production can be defined as inputs that are used for the production of goods or services with the aim to make economic profit.

The factors, of production are the resources that include land, labor, capital, and enterprise.

Land involves natural resources labor is associated with human resources, capital includes manmade resources, and enterprise combines all the three factor, to carry out the production process. Therefore, all the four factors of production are equally important for the production activity of an organization. According to Eraser, “Factor of production as a group or class of original productive resources.”

The production process of an organization can be efficient, if there is an optimal use of factors. This implies that the factors of production should be used in combination, so that the production target can be achieved. The factors of production can be used as complementary as well as substitute of each other.

For example, if an organization has adequate capital only then it would hire labor for producing goods and services. Similarly, when skilled labor is available to produce goods and services, then only the organization would invest capital for production purpose.

In such a case, land and capital are complementary to each other. On the other hand, if an organization has enough capital to purchase advance technology, then it would prefer to reduce the number of labor. However, if the organization has shortage of capital, then it would use more labor instead of investing on advance technology and machines. In such a case, capital and labor act as substitute of each other.

1. Land:

In literary sense, land is regarded as soil. However, in economics, land, a factor of production, has a much wider scope. Marshall has defined land as, “the materials and the forces which nature gives freely for man’s aid, in land and water, in air and light and heat.” Land refers to a natural resource that can be utilized to produce income. It is a useful factor of production, but is available in limited quantity.