CONTENTS1) What is Production.2) What is Factors of Production.3) Basic Factors of Production. • Land and its Features. • Labour and its Features. • Capital and its Features. • Entreprenuer and its Features.
What is 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."
What is Factors of Production 1) Anything that assist production is termed as factor of production.2) But mere existence is not necessarily a factor of production. 3) It become a factor of production only when it actually assist or contributes to production.
1) Land is the original and primary factor of production.2) Without land the production process cannot exceed further.3) 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.
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.
1) Labour is a human factor of production.2) In economics labour is defined as- “Economic activity of man with HEAD and HAND.”3) LABOUR is human factor of any kind, manual or mental,skilled or unskilled, scientific or artistic undertaken with a view of creating or adding utility.
1) Labour is a human factor.2) Active factor.3) Labour cannot be stored.4) No two labours are identical.
1) Capital is a man-made resource of production used to produce further wealth.2) It refers to the stock of capital assets such as factories,machines, tools & equipments, raw material, transport vehicles etc…3) Therefore capital is defined as “Produced means of production”
Features of Capital1) 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.
Entreprenuer1) Entreprenuer is a person who brings in land, labour & capital in one place & uses it for the production process.2) He is the person who decides- a) What to produce? b) How to produce? c) Where to produce?3) The person who takes these decisions along with the risk associated with them is known as ‘Entreprenuer’.
Features of Entreprenuer1) 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.