Factor Of Production

Welcome to class!

In today’s class, we will be talking about the Factors of Production. Enjoy the class!

What is the factor of production?

Factors of Production can be defined as the basic resources or agents used for producing goods and services. Factors of production make it possible for goods to be produced in the required quantity and quality.

The factors of production are land, labour, capital and entrepreneur.

LAND:

The land is a gift of nature; it refers to the resources provided by nature to aid the production of goods and services. Examples of land are rivers, farmlands, seas, the fishes in them, forestry minerals such as coal, crude oil, iron etc. Others are the climatic conditions like rain, sunshine, animals etc.

Features of land

The following points below are the characteristics of a land;

Land is immobile i.e. the location of land cannot be changed; it is fixed.
The value of land varies from one location to another.
It is a gift of nature.
The supply of land is limited.
The reward for land is rent

LABOUR:

Labour is the mental or physical efforts of man, which is directed towards the production of goods and services. Examples of labour are the work of farmers, carpenters, teachers, police officers etc.

Characteristics of labour

Labour is mobile i.e. can move from one location to another
Labour controls other factors of production.
It requires motivation.
Labour is not fixed.
Labour is a human factor

CAPITAL:

Capital is defined as the man-made assets used in production. It is the man-made wealth used in the production of goods. The reward of capital is “interest”.

Characteristics of capital

Capital is man-made.
It is durable.
Capital exists in different forms
It promotes division of labour
Capital exists in different forms

ENTREPRENEURS:

The entrepreneur is the person who combines the all other factors of production. He coordinates and directs the factors of production to produce goods and services.