Why is human capital the most important factor of production? Give three reasons.
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(a) Human capital refers to the people who possess the knowledge and enterprises to
put together the other factors of production.
(b) Investment in human capital yields a return just like investment in physical capital.
(c) It is essential as physical capital cannot produce goods and services on their own.
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Human Capital is one of the most important factors of production because of the following reasons :
1. All other factors of production are created by human capital and depends upon it.
2. It is the human capital which channelize the other factors of production and improves them as well.
3. There are some factors of production which are wholly dependent upon human capital and there is no substitute for it till now.
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