Question

What are the Factors of Production? What are the Characteristics of Factors of Production? Illustrate. 

Answer 1

 

Factors of production entail the required inputs for any good or service to be created. The production of production is land, labor, capital, and entrepreneurship. They are illustrated as follows:

1.  Land

It is the most considered basic factor needed for any production exercise. It includes all-natural resources below or above the land surface. That is to say that land includes all those resources which have not been created by human beings but have been received free from nature. In this regard, land surface, all mineral resources, forests, hills, rivers, seas, air, and water get considered as land.

2.  Labor

Labor is another essential factor of production. In economics, it entails any work by body or mind done for payments.

 Labor is mostly divided into three categories.

a). Unskilled - labor or work for which no prior training or experience is necessary and can be done by anybody.

b). Semi-skilled and - labor in which some training, education, or experience is necessary but which can be learned easily.

c). Highly skilled - work for which a good amount of training and education is essential.

3. Capital

In economics, capital refers to the resources that are man-made. In addition, all those factors that have been produced by human effort and further used for production activity are called capital. Moreover, buildings, machinery, plant, equipment, road, railway lines, and bridges get termed as capital.

 4. Entrepreneurship

Entrepreneurship is the factor that activates Land, labor, and Capital factors and makes them work.  Consequently, it is regarded as the catalytic agent. Entrepreneurship involves a variety of activities that include:

(i)  Deciding to undertake production activity.

(ii) Arranging factors of production.

(iii) Fixing the payment of other factors.

(iv) Bearing of the risk and uncertainty of production.

(v) Undertaking Innovation and

(vi) Making all the final decisions about the production process and the organization.

 

Factors of Production characteristics

 The factors of production have the following characteristics.

1.  Complementarity- It means that production is possible only when all factors of production are present.

2. Substitutability - This means that one factor of production can substitute another factor to some extent.

3.  Specificity- It means that it can be used for a specific product only and not for others.

4.  Mobility.

 Mobility is of two types -

1.  Occupational - the ability of a factor of production to move from one occupation or industry to another.

2.  Spatial or Locational - It is when a factor of production moves from one place to another place. 

 

 

 

 

 

 

 

Factors of production entail the required inputs for any good or service to be created. The production of production is land, labor, capital, and entrepreneurship. They are illustrated as follows:

1.  Land

It is the most considered basic factor needed for any production exercise. It includes all-natural resources below or above the land surface. That is to say that land includes all those resources which have not been created by human beings but have been received free from nature. In this regard, land surface, all mineral resources, forests, hills, rivers, seas, air, and water get considered as land.

2.  Labor

Labor is another essential factor of production. In economics, it entails any work by body or mind done for payments.

 Labor is mostly divided into three categories.

a). Unskilled - labor or work for which no prior training or experience is necessary and can be done by anybody.

b). Semi-skilled and - labor in which some training, education, or experience is necessary but which can be learned easily.

c). Highly skilled - work for which a good amount of training and education is essential.

3. Capital

In economics, capital refers to the resources that are man-made. In addition, all those factors that have been produced by human effort and further used for production activity are called capital. Moreover, buildings, machinery, plant, equipment, road, railway lines, and bridges get termed as capital.

 4. Entrepreneurship

Entrepreneurship is the factor that activates Land, labor, and Capital factors and makes them work.  Consequently, it is regarded as the catalytic agent. Entrepreneurship involves a variety of activities that include:

(i)  Deciding to undertake production activity.

(ii) Arranging factors of production.

(iii) Fixing the payment of other factors.

(iv) Bearing of the risk and uncertainty of production.

(v) Undertaking Innovation and

(vi) Making all the final decisions about the production process and the organization.

 

Factors of Production characteristics

 The factors of production have the following characteristics.

1.  Complementarity- It means that production is possible only when all factors of production are present.

2. Substitutability - This means that one factor of production can substitute another factor to some extent.

3.  Specificity- It means that it can be used for a specific product only and not for others.

4.  Mobility.

 Mobility is of two types -

1.  Occupational - the ability of a factor of production to move from one occupation or industry to another.

2.  Spatial or Locational - It is when a factor of production moves from one place to another place.