What are factors of Production?
Resources available on earth to make goods and services to satisfy our needs and want are limited.
In economics, factors of production (or productive inputs) are the resources employed to produce goods and services. These can be categorised as
- Land: All natural resources are provided by nature such as fields, forests, oil, gas, metals and other mineral resources. The payment for land use and the received income of a land owner is rent.
- Labour: Human effort used in production which also includes technical and marketing expertise. The payment for someone else’s labour and all income received from ones own labour is wages. Labour can also be classified as the physical and mental contribution of an employee to the production of the good(s).
- Capital: Human-made goods (or means of production) which are used in the production of other goods. These include machinery, tools and buildings.
- Enterprise: The skill and risk taking ability of the person who brings together all the other factors of production together to produce goods and services. Usually the owner or founder of a business.
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