Course Title : Economics Semester : 5

1. Factors
of
Production
Swarup Saha
Student id : 15100007

2. 1) What is Production.
2) What is Factors of Production.
3) Basic Factors of Production.
– Land and its Features.
– Labor and its Features.
– Capital and its Features.
– Entrepreneurship and its Features.
Contents

3. Production
• Production is an outcome of an economic activity.
• Prof. J. R. Hicks defines Production as "any
activity directed towards the satisfaction of other
peoples wants through exchange."

4. Factors of Production
• Anything that assist production is termed as factor
of production.
• But mere existence is not necessarily a factor of
production.
• It become a factor of production only when it
actually assist or contributes to production.

5. Basic Factors of Production

6. Land
• Land is the original and primary factor of
production.
• Without land the production process cannot
exceed further.
• In Economics all the natural resources that are
available –
a) on the surface of the earth
b) below the surface of the earth
c) above the surface of the earth and which are used in
the production process is called LAND.

7. Features of Land
1) Land is a free gift of nature.
2) Land has no cost of production.
3) The supply of land perfectly inelastic.
4) Land is subject to Law of Diminishing Return.
5) Land is immobile.

8. Labor
• Labor is a human factor of production.
• In economics labor is defined as- “Economic
activity of man with HEAD and HAND.”
• Labor is human factor of any kind, manual or
mental, skilled or unskilled, scientific or artistic
undertaken with a view of creating or adding
utility.

9. Features of Labor
1) Labor is a human factor.
2) Active factor.
3) Labor cannot be stored.
4) No two labors are identical.

10. Capital
• Capital is a man-made resource of production
used to produce further wealth.
• It refers to the stock of capital assets such as
factories, machines, tools & equipment's, raw
material, transport vehicles etc…
• Therefore capital is defined as “Produced means
of production”

11. Features of Capital
1) Capital is man-made factor of production.
2) Supply of capital is elastic.
3) Capital has mobility.
4) All capital is wealth but all wealth is not
capital.

12. Entrepreneur
• Entrepreneur is a person who brings in land,
labor & capital in one place & uses it for the
production process.
• He is the person who decides-
a) What to produce?
b) How to produce?
c) Where to produce?
• The person who takes these decisions along with
the risk associated with them is known as
‘Entrepreneur’.

13. Features of Entrepreneur
1) He must be a good administrator.
2) He must possess complete knowledge.
3) He must be a person of imagination.
4) He must be a man of action.