Question

What are the factors of production? Why is money not considered a factor of production? Explain.

Answer 1

• Factors of production is an Economic term which explains the inputs used in the production of goods or services in order to make an Economic profit.
• The four factors of production are land, labour, capital and Entrepreneurship.

Land:-

Includes all natural physical resources like fertile farm land climate or the wind and solar power.

Some countries are richly enriched with natural resources and are specialised in their production and extraction.

Labour:-

Is the human energy into production. Example the workers and their productivity.

Increase the size and quality of labour force is important,if the country wants to achieve Economic growth.

Capital:-

Capital goods are those goods used to produce consumer goods and services.

They include machineries, factories and building equipments etc.

Entrepreneurship:-

Regarded as a specialised form of labour input.

An Entrepreneur is a person who supplies products to a market or a firm to make Economic profit.

They invest their own property in a business on their own risks.

Money is not considered as a factor of production because it is a resource used to achieve resources that go into producing products .

It is not a capital because it is not a productive resource.