FACTORS OF PRODUCTION

The Factors of production are various economic resources used in the production of goods and services (output or commodities). They are also known as economic resources or inputs or agents of production. They are classified into Land, capital, Labour and Entrepreneur.

I. LAND: Land refers to all the natural resources availble for production such as rivers water forest etc. Therefore Land is a gift of nature

CHARACTERISTIQUES OF LAND

Land is a gift of nature. This means that Land has no cost of production.

Land is limited in supply (or in quantity). This means that the total amount of natural resources in Land are fixed.

Land is heterogeneous. This means that the quality of Land varies from one place to another. No two pieces of Land can be the same in termes of their fertility, texture, color etc

The reward to Land is rent. Those who owe Land receive a reward known as rent

Land is Subjet to the Law of Diminishing returns. The Law of Diminishing returns states that « as more and more of a variable factor is added to fixed factor, marginal product begins to rise and later on falls ».

Land is geopgraphically Immobile. This characteristic means that Land cannot be tranferred from one place to another. For example. Land in India cannot be transferred to Denmark

II. LABOUR

Labour simple refers to human efforts both mental and Physical directed toward the production of goods and services. Labour receive a reward known as wages or salaries

TYPES OR CLASSIFICATION OF LABOUR

There exist basically two types of Labour. ie Productive and unproductive labour.

1). Productive Labour: This is the type of Labour who earns a reward during the process of Production. For example an economics teacher who earns a salary at the end of the month.

2). Unproductive Labour: This is Labour who doesnot earn a reward during the process of Production. For example a painter painting his own house.

III. CAPITAL

It can be defined as any man-made resource used in the Production of goods and services. Or still it can be defined as wealth set aside for further Production of welth.

TYPES OF CAPITAL

✓ Fixed capital

✓ Specific or sunk capital

✓ Social capital

✓ Circulating working or sunk capital

✓ Human Capital

IV. ENTREPRENEUR

The entrepreneur can be defined as the owner of a business who organise