They also mean that they are free gifts of nature. Land, in economics, talks about all the natural resources of Earth. In economics, land covers many other things as well. When people speak of land, they only mean the surface of the Earth. Since, capital and intellectual capital are more difficult to understand, they will be covered at a higher level. Intellectual Capital (Entrepreneurship)įor this article, we will be discussing the two simpler ones – land and labor.There are usually four types of factors of production: For Mridul, the factors of production are everything that needs to cook the Maggi. For John, the factors of production are everything that he needs to make the car. These are the factors of production that they need to make what they want. Mridul needs a Maggi packet, a pan, and water. John needs plastic, batteries, antennae, tires etc. Without them, Mridul will not be able to cook and eat the Maggi.įactors of production are all the things that are needed to make something. Only when Mridul has all of these things can he cook the Maggi. He will need a pan and he will need water so that he can cook the maggi. To make the Maggi he will need to buy a packet of maggi. A boy, Mridul, wants to cook and eat Maggi. Plastic, batteries, antennae, tires and many other things will be needed by John to build the car. As you can see, John will need many things to build the toy car. John will also need to buy small tires so that the car can move. He will need an antenna for the car and remote to connect. To run the toy car, batteries will be needed. What could these things be? John wants the toy to be made of plastic. To make the toy, he will need to collect and join different things. He cannot make the toy car out of nothing. First, let’s ask the question – What does ‘Factors of production’ mean? Let’s answer this. The two most basic factors of production will be discussed – land and labor. In this text, the topic of discussion will be factors of production. Labour, on the other hand, is the work done by people. Capital the amount invested by the owner in his or her business and intellectual capital means humans, connections, and intelligence. To make a commodity and earn profit a business enterprise has to employ these factors of production. The land is all the free available resources provided by nature. There are usually four types of factors of production- land, labour, capital, and intellectual capital or entrepreneurship. Factors of production are all the things that are needed to make a commodity.
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