what is the meaning of factor of production
Answers
Answer:
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, finished goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relationship called the production function. There are four basic resources or factors of production: land, labour, enterprise and capital.
The factors are also frequently labeled "producer goods or services" to distinguish them from the goods or services purchased by consumers, which are frequently labeled "consumer goods".
There are two types of factors: primary and secondary. The previously mentioned primary factors are land, labour, enterprise and capital. Materials and energy are considered secondary factors in classical economics because they are obtained from land, labour, and capital. The primary factors facilitate production but neither becomes part of the product (as with raw materials) nor becomes significantly transformed by the production process (as with fuel used to power machinery).
Land, labor, and capital as factors of production were originally identified by the early political economists such as Adam Smith, David Ricardo, and Karl Marx.
CORPORATE FINANCE & ACCOUNTING ACCOUNTING
Factors of Production
By ADAM HAYES
Reviewed By JANET BERRY-JOHNSON
Updated Jan 28, 2020
TABLE OF CONTENTS
EXPAND
What Are Factors of Production?
The Basics of Factors of Production
Ownership of Factors of Production
Special Considerations: Technology's Role in Production
What Are Factors of Production?
Factors of production are the inputs needed for the creation of a good or service. The factors of production include land, labor, entrepreneurship, and capital.
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Factors Of Production
The Basics of Factors of Production
The modern definition of factors of production is primarily derived from a neoclassical view of economics. It amalgamates past approaches to economic theory, such as the concept of labor as a factor of production from socialism, into a single definition.
Land, labor, and capital as factors of production were originally identified by the early political economists such as Adam Smith, David Ricardo, and Karl Marx. Today, capital and labor remain the two primary inputs for the productive processes and the generation of profits by a business. Production, such as in manufacturing, can be tracked by certain indexes, including the ISM Manufacturing Index.
Land as a Factor
Land has a broad definition as a factor of production and can take on various forms, from agricultural land to commercial real estate to the resources available from a particular piece of land. Natural resources, such as oil and gold, can be extracted and refined for human consumption from the land. Cultivation of crops on land by farmers increases its value and utility. For a group of early French economists called the physiocrats who pre-dated the classical political economists, the land was responsible for generating economic value.
While the land is an essential component of most ventures, its importance can diminish or increase based on industry. For example, a technology company can easily begin operations with zero investment in land. On the other hand, the land is the most significant investment for a real estate venture.
Labor refers to the effort expended by an individual to bring a product or service to the market. Again, it can take on various forms.
hope this answers helps you
Answer:
Factors of production is an econamic term that inscribed the input used in the production of goods or services in order to make an economic profit.The factor of production typically include land,labour,capital,entrepreneurship and the state of technological progress...