Factors Of Production
Reviewed by Aug 27, 2020| Updated on
The factors of production are the inputs that are required to create goods or services. These factors include land to set up production facilities, working capital, and employees. The latest definition of factors of production is basically derived from the economics of neoclassical times. It combines past methods with an economic theory like the labour concept and socialism into one definition.
The age-old political economists initially saw capital, labour, and land as factors of production. In the modern world, labour and capital still remain as the primary inputs for the production activities and generating revenues and profits by an organisation. Production activities like the ones in manufacturing may be tracked by particular stock market indices that are widely followed by several investors and economic analysts.
Land can be considered as a broad definition as a factor of production and may be able to take up several forms. It may be used for a variety of activities ranging from agricultural purposes and mining activities to extract precious or commercial metals. Even the naturally available resources such as petrol or diesel could be extracted or refined from the crude oil on a particular piece of land. Cultivation of food or commercial crops could also be made on the land under consideration. The cost of acquisition of land can be expensive if there is a high demand for several reasons.
The term ‘labour’ refers to an individual who is employed in order to produce a product or offer a service in the market by an organisation. For instance, the workers involved in construction at a college is also a part of the labour, just like a professor who is involved in teaching the students admitted into the institution.