Theory of procduction

1. CONTENTS
Meaning of
production
What is factor
of production
Land and its
characteristics
Labour and its
characteristics
PRESENTED BY
• ADITI THAKUR
• KOMAL KUMARI

2.  Production is defined as the process of converting the
input (Raw materials) into output.
It is organized activity of transforming resources into finished
products in the form of goods and services.
And it’s objective is to satisfy the demand of such
transformed resources.
 Production may be an activity that generates incomes.
MEANING OF PRODUCTION

3.  Production is one of the most important economic
activity that takes places in any economy apart
from consumption and investments.
 Production means creation of those goods and
services which have economic utilities. i.e.,
exchange value.
 for example:-
Inputs of sugarcane , capital and labour are used
to produce SUGAR.
 Production also includes production of services
like those of lawyers, teachers, doctors, etc.

4. What are factors of production?
 Anything that assist in production is termed as factor of production.
It becomes a factor of production only when it actually assist or
contributes to production.
Factor of production includes :-
1) LAND
2) LABOUR
3) CAPITAL
4) ENTREPRENEURSHIP

6. LAND
 Generally, land means earth’s surface.
 However, in economics land refers to all the free gifts of
nature i.e. natural resources.
 Land includes natural resources :
 On the surface of earth; E.g. Soil, forest, plots of land, etc.;
 Below the surface of earth, E.g. mineral deposits, etc., and
 Above the surface of earth, E.g. climate, sunshine, rain, etc.

7. CHARACTERISTICS OF LAND
 PRIMARY FACTOR :- Land is the original and primary or natural factor of production. It provides
various natural resources for production.
 FREE GIFT OF NATURE :- Land is the creation of nature and not mane made. It is a free gift of
nature to mankind.
 PASSIVE FACTOR :- Land does not yield only result unless human efforts and capital are
employed.
 LACK GEOGRAPHICAL MOBILITY :- Land cannot be moved bodily from one place to another.
However, land is said to be mobile is the sense it can be put to many alternatives uses.
 LAND HAS MULTIPLE USES :- It can be used for various purposes, though the suitability in all the
uses is not the same.
 For e.g. commercial purpose, agricultural purpose, residential purpose etc.

8. LABOUR
 Labour in economics means any work whether
physical or mental done in exchange for some
monetary reward.
Anything done out of love and affection is not
labour in economic sense.

9. CHARACTERSTICS OF LABOUR
 HUMAN FACTOR :- It is a live factor of production. Hence, labour has feelings and temperament.
So, it is very much affected by surroundings, working, conditions, motivation, recreation, working
hours, etc.
 LABOUR IS PERISHABLE :- Labour cannot be use for future use. It is highly perishable. A day
loss without work means a day’s work gone forever. Hence, labourer has weak bargaining power
and has to accept even low wages.
ACTIVE FACTOR :- Labour is the most active factor of production. Other factors are made
operative with use of labour.
 HETROGENEOUS :- Labour powers differ from labourer to labourer.
Labour powers depend upon physical strength, education, skill, training, efficiency, etc.
Hence, labour can be classified as unskilled, semi skilled and skilled labour.