Question

write three differences between land and capital

Answer 1

Land is a generic term in economics. It includes the ground on which we live, grow crops, build factories and houses. And it includes all natural resources we use in production — water, minerals, energy sources like coal and oil, etc.

Combine land (as defined above) with labor and you produce stuff. So for example, you dig some piece of land, plant seeds, and tend the crop for a while. That’s your labor. So you have a product (food) where the factors of production are land and labor.

Now if you had a tractor to dig the field with, then you could using some labor produce more food than you would have with your unaided labor. That tractor is capital — something that is produced by humans but is used for the production of stuff we actually consume.

So according to this definition, land is not capital. Land is what’s found on or close to the surface of the earth (including the oceans). Labor is what we supply. And capital is what we first produce and then later use it for helping in further production.