Explain the factors of production in detail.

production activity go through the different steps and different factors of production are needed to complete the production. The factors of production are mentioned below:

a. Land: Land is a gift of nature, the land does not merely mean soil, but it also includes water, climate etc. As it is a natural resource, it is a fixed factor of production and it cannot be moved from one place to another. Different type of land have different use and they contribute accordingly like the land is farm is used for cultivation of the crop, whereas in the city it is used a factory premise etc.

b. Labour: Physical and mental efforts made by human in the production process is called labour, efforts which are made with the purpose to earn money are considered in labour. Different people contribute in a different capacity in the production process and fetches different wages, all the efforts are not the same and they depend on the skill set of the person. For example, people working as labour fetches low wages then someone working a supervisor over them, that’s why labour is called as a dynamic factor of production, as different efforts have a different value in the production process.

c. Capital: Capital is not only money, but all the goods, abilities, qualification and knowledge used in the production process. Capital has long term benefit in the production process, it is a produces component which is earned by human using natural resources.

d. Entrepreneur: it is also called as venturesome. An entrepreneur is a person who actually starts production process by taking the risk with the aim of making a profit, He operates and manages different factors of production, i.e. land, labour and capital in the production process. He takes all the risk, understands all the rewards and initiates the production and that why he called an entrepreneur. After paying all the factor of production, i.e. Rent, salaries etc. whatever remains is his reward.