Question

What is the basic difference between the following factors of production-land and capital

Answer 1

Answer:

1. land is natural resource and capital is money

2 land is the first requirement whereas capital is the third

3 land is fixed and capital is important for production

Although land can be said to be a form of capital, the major differences between the two are:

1. Land is a purely natural resource whereas capital comprises anything which has value. Ex. - money, gold, machinery etc.

2. Whereas land is a fixed resource, there is no limit to the amount of capital that can be raised.

3. Land is a primary factor of production meaning it is absolutely necessary for production whereas capital is a secondary factor of production.

Explanation:

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Answer 2

In Production Economics or Microeconomics,land refers to a fixed natural resource or gift used for commercial or production purposes.

Capital,on the other hand,is identified as physical factors or inputs of production used in the production process.

Explanation:

• Land is one of the important factors of production.It is a natural resource or gift from nature which are used for various commercial or production purposes.Land is a fixed geographical area or space which cannot be changed or altered physically under any circumstances.It is an open natural space which can be utilized by the any firm or company to set up the physical factory,plant or office space for production purposes and business operation.However,the productivity or efficiency of land can be improved which expands its economic or commercial value.
• On the other hand,capital refers to the physical factors or inputs of production such as machines,physical tools and equipment,techniques etc which are used in production process.In the long run,the firm or the company can change or alter the level of its capital resources or inputs according to its profit maximizing intentions and production or output level.Hence,it is not naturally fixed as land and can be manipulated by the firm in the distant future.