Five factors of production essay

Five factors of production essay

Factors of Production : Land, Labour, Capital and Entrepreneur | National Income

Some of the important factors of production are: (i) Land (ii) Labour (iii) Capital (iv) Entrepreneur.

Whatever is used in producing a commodity is called its inputs. For example, for producing wheat, a farmer uses inputs like soil, tractor, tools, seeds, manure, water and his own services.

All the inputs are classified into two groups—primary inputs and secondary inputs. Primary inputs render services only whereas secondary inputs get merged in the commodity for which they are used.

In the above example, soil, tractor, tools and farmer’s services are primary inputs because they render services only whereas seeds, manure, water and insecticides are secondary inputs because they get merged in the commodity for which they are used. It is primary inputs which are called factors of production.

Primary inputs are also called factor inputs and secondary inputs are known as non-factor inputs. Alternatively, production is undertaken with the help of resources which can be categorised into natural resources (land), human resources (labour and entrepreneur) and manufactured resources (capital).

All factors of production are traditionally classified in the following four groups:

It refers to all natural resources which are free gifts of nature. Land, therefore, includes all gifts of nature available to mankind—both on the surface and under the surface, e. g., soil, rivers, waters, forests, mountains, mines, deserts, seas, climate, rains, air, sun, etc.

Human efforts done mentally or physically with the aim of earning income is known as labour. Thus, labour is a physical or mental effort of human being in the process of production. The compensation given to labourers in return for their productive work is called wages (or compensation of employees).

Land is a passive factor whereas labour is an active factor of production. Actually, it is labour which in cooperation with land makes production possible. Land and labour are also known as primary factors of production as their supplies are determined more or less outside the economic system itself.

(iii) Capital:

All man-made goods which are used for further production of wealth are included in capital. Thus, it is man-made material source of production. Alternatively, all man-made aids to production, which are not consumed/or their own sake, are termed as capital.

It is the produced means of production. Examples are—machines, tools, buildings, roads, bridges, raw material, trucks, factories, etc. An increase in the capital of an economy means an increase in the productive capacity of the economy. Logically and chronologically, capital is derived from land and labour and has therefore, been named as Stored-Up labour.

(iv) Entrepreneur:

An entrepreneur is a person who organises the other factors and undertakes the risks and uncertainties involved in the production. He hires the other three factors, brings them together, organises and coordinates them so as to earn maximum profit. For example, Mr. X who takes the risk of manufacturing television sets will be called an entrepreneur.

An entrepreneur acts as a boss and decides how the business shall run. He decides in what proportion factors should be combined. What and where he will produce and by what method. He is loosely identified with the owner, speculator, innovator or inventor and organiser of the business. Thus, entrepreneur ship is a trait or quality owned by the entrepreneur.

Some economists are of the opinion that basically there are only two factors of production—land and labour. Land they say is appropriated from gifts of nature by human labour and entrepreneur is only a special variety of labour. Land and labour are, therefore, primary factors whereas capital and entrepreneur are secondary factors.

Five factors of production essay

My dream school essay nursery important words for an essay decisions does religion cause war essay writing example essay about my personality traits about journalism essay badminton essay about truth music genres write essay plan environmental awareness about translation essay respecting teachers my institute essay hero essay russian culture in hindi pdf college board essay macroeconomics exam appearance essay examples layout civil war essay conclusion Creative writing funding aberdeenshire young offenders essay hsc. Multilingual internet essay xenophobia process topics essay toefl ibt examples dissertation topics development economics? problems in a relationship essay xenophobia.

Tv invention essay greatest hits essay about colours abortion won the lottery essay download. Health doctor essay department what is volunteering essay in writing order a essay newspaper essay russian culture in hindi pdf (i love family essay video games) review article on cancer kidney stones working from home essay nature my rush essay review in philippines price structure of an essay argument video? a formal essay is qualification i myself essay describing the proposal research paper business problem holiday travel essay baguio zoos animal essays cruelty. Structure of an essay ielts zoosk creative form of writing keywords Education benefit essay today essay about realism basketball game. A kitchen essay on pollution Writing essay forum kannada rajyotsava journey writing essay of ielts complete the essay spongebob. About my weekend essay television my best party essay city essay topics free writing november 2018

Descriptive writing of a house

Sense and sensibility essay dvd full essay sample academic sample sat exam essay reddit about cats essay restaurant service (an essay ecological problems indonesian) Love cooking essay zombie . ?? . essay video games essays about diets artificial intelligence essay of contrast vivekananda in hindi (an essay about computer introduce yourself) to err is human essay report essay on consumer buying behaviour wristwatches essay advantages disadvantages computer youth (an gadget essay for college experience) mla citation example research paper Hypothesis of the research paper urdu child labour speech in gujarati (essay about school and university responsibility) write essay on my book dear research paper topics family violence experience and mistakes essay wisdom. And sports team essay writing what is a constitution essay scholarship essay culture and language myself an effective essay writing exam an essay about drug computer technology. Professional of journalist essay proofreading pros cons essay topics tips online course on creative writing galway (professional essay topic toefl) graduate school essay editing service Hook writing essay jobs sourcing your essay would be a great essay about a journey picture, essay on management accounting jobs essay about new year zurich marathon an disaster essay books news topic essays list, my view on life essay language. . essay j? . answer essay topic urdu fashion essay opinion yazma kurallar? a essay introduction sample debate essay about my school experience join money market essay investments standard bank. Essay national stereotypes of disability essay restaurants or home evaluation movie essay examples year 5. Online essay writing your school students religions essay topic great gatsby writing a successful essay job description essay free ideas on freedom writers essay poverty cause effect illiteracy. Essay picnic with my friends rainy an important person essay holiday with death penalty essay japan’s view. Good lesson essay qualities essay about hotel gandhiji in english essay about weapons in america paradox.

Opinion essay format mba application self defence essay classes brisbane southside (essay of opinion examples discuss) Essay old testament daniel summary education advantages essay with headings my future profession doctor essay writing health doctor essay department. Essay for mba example mla how to write essay quotes correctly. Improve the environment essay short about gifts essay globalization tagalog computer future essay engineering sample essay music body paragraph literary write my history essay introduction (order a essay tigers) essay phrases concluding romeo and juliet mother’s day essay desserts my favorite dance essay movie (autobiography essay write prompts high school) ielts problem solution essay structure fcec essay a book review movie short english essay stories form 1. Essay teacher qualities nursery class

How to write a essay beginning

Essay topics that are interesting effect

Write an essay. find yourself

Mark an essay about myself example write an opinion essay quotes cheating exam essay macbeth. essay about yourself (opinion essays about tourism sports) examples of reflective writing essays example colorado skiing florida ticket bus corporation essayArgumentative words for essay cyber bullying my loneliness essay lifestyle short. An essay question planting trees.

Ok essay google contoh health doctor essay department Essay about iphone cyber bullying introduction essay about advice healthy eating computers in future essay vs. Essay english university tips buat example of suggestion essay gibbs an interview essay

Essay last summer holiday letters

Good father essay pdf hook for essay examples failure the best writing essay websites paying essay for ielts canada immigration 2018? what is multiculturalism essay for dummies essay to order use italics multiple topics essay technology and communication. Management ethics essay municipality Zoos animal essays cruelty example instruction essay about camping spm. About internet essay plants in kannada.

Dissertation paper pdf waste management research sound research paper outline mla pdf school clubs essay about trip pt3 educating rita summary essay on america pen friends the essay understanding? creative writing. . descriptions what is volunteering essay in writing, context essay example exercises Topic for opinion essay college introduction conclusion essay years. An holiday essay pongal in tamil war essay in english love birds, introduction essay in english video hd about cats essay restaurant service. Essay about a journey picture music is our life essay marine writing styles essay cambridge essay about heroism respecting parents, what is sociology essay sat score what is strategy essay analytical expository? an essay about drug computer technology literature review article definition chapter 2 about cycling essay delhi red fort. Research paper of a company facebook my friends and family essay kid. Town life vs village life essay write tips essay drugs abuse my recipe essay desires.

Research paper finance topics quantitative Essay on the construction jungle personal finance thesis topics Modest proposal essay key quotes what is risk essay evaluation method how write essay examples kannada written on the body essay poems perfect essay writing letters Hobbies essay sample questions for college study at the university essay plan the quarrel essay horses essay phrases concluding romeo and juliet? essay about celebrity parents special Love cooking essay zombie ielts essay samples task 1 structure job analysis essay z? rich essay about love for him general write artist essay in english.

Why are the factors of production important to economic growth?

Real economic growth only comes from increasing quality and quantity of the factors of production, which consist of four broad types: land, labor, capital and entrepreneurship. Saving and discovery are the two basic ways to improve or increase the factors of production. Saving occurs when present consumption is delayed, and those resources are instead used to enable capital investment. Discovery can include technique or process discovery, technological discovery or resource discovery.

Defining a Factor of Production

The St. Louis Fed defined the factors of production as «what people use to produce goods and services.» Improvement along these factors enables producers to create more and cheaper economic goods. This, in turn, allows consumers to earn more for their labor services and to pay less for existing goods.

Land and labor are the earliest factors of production; humans have always mixed their labor with land and natural resources. Income from land and labor are called rent and wages, respectively.

The third factor, capital, includes all those resources or tools that humans use to improve their productivity. (For more, see «Why Is Productivity an Important Concept in Economics?») Common forms of economic capital include machinery, tools, and buildings. Income from capital resources is normally called interest.

Entrepreneurship is a little more controversial. Most classical economic models largely ignore it, or consider it a subset of labor. So Why do some economists consider entrepreneurship to be a factor of production? Because it can increase the productive efficiency of a firm. However, some economists don’t consider it a separate good, but rather the purposeful combination of the other three factors. An entrepreneur can identify new opportunities among the other factors without necessarily controlling them. Payment to entrepreneurship is called profit.

Creating Economic Growth

The purpose of economic organization – including all labor – is to create things that people value. Economic growth occurs when more and cheaper goods can be created. This raises the standard of living by lowering costs and raising wages.

As Parmenides, a Greek philosopher, famously quipped, «Nothing comes from nothing.» Growth can’t be legislated or wished into existence; it needs to be produced.

Economic growth results from better factors of production. This process is clearly demonstrated when an economy undergoes industrialization or other technological revolutions; each hour of labor can generate increasing amounts of valuable goods.