Factors of Production<br />By-:<br />ShubhamSinghal<br />ChandrashekharBhardwaj<br />
What is Production?<br /><ul><li> Production means, a process by which resources (men ,material, time etc.) are transformed into a more useful commodity or services.
In general, Production means transforming inputs ( Labour, machines, raw materials, etc.) into an useful & desired output.</li></ul> For e.g. <br /><ul><li> Steel from iron ore,
Legal services like medical, consultancy, hospitality etc.</li></li></ul><li>Factors of Production<br /><ul><li> Factors of Production are parameters which affects output of any production.
Factors of production means ‘inputs’ and finished goods means ‘output’.
Input decides the quantity of output i.e. output depends upon input.
Input is the starting point and output is the end point of production process.</li></li></ul><li>Major Factors of Production<br /><ul><li> There are basically 4 factors on which production depends-:</li></ul>1) Land,<br />2) Labour,<br />3) Capital,<br />4) Entrepreneur.<br />
3) Capital<br /><ul><li>In Book-Keeping, Capital means amount invested by businessman in the business.
In commerce subjects like O.C & S.P, Capital means finance or company's capital.
But, in economics, Capital is that part of wealth which is used for production.</li></li></ul><li>Capital as part of Wealth<br />Any Commodity own by any person is his wealth. But when wealth is used in production process, it is called CAPITAL. For e.g.<br />A motor cab own by any person is his wealth. But when this Car is used in Taxi Services, then it is called CAPITAL.<br />
4) Entrepreneur<br /><ul><li> The term 'Entrepreneur' has been derived from a French word 'Entreprendre' meaning to undertake certain activities.
Normally, Entrepreneur has to perform two types of functions which are explained here with the help of pictures given in next slide-:</li></li></ul><li>1) Organization Function-:<br />Factors of Production viz. land, labour and capital are scattered at different places. All these have to be assembled together. This is done by enterprise through entrepreneur. This is 'Organization Function'. Org. function is the work of bringing the required factors together and making them work harmoniously.<br />
2) Risk Bearing Function-:<br />Entrepreneur has to bear risks and uncertainties. For facing uncertainties he may get profit or may incur loss. This is the 'Risk Bearing Function' and entrepreneur is the risk bearer.<br />
Qualities / Skills of an Entrepreneur<br /><ul><li>Ability to organize.