This document discusses several economic concepts related to factors of production. It defines factors of production as resources that contribute to output, including land, labor, capital and organization. It then provides more details on the characteristics and definitions of specific factors: - Land refers to natural resources and includes characteristics like being a gift of nature, fixed quantity, and differing fertility. - Labor means any work and has characteristics of being perishable, active, and heterogeneous. - Capital is man-made, productive, mobile and elastic in supply. It also discusses division of labor and its advantages like increased output and quality, and disadvantages such as monotony. Localization of industry and its causes, advantages like reputation and

1. Factors of Production
• Meaning:
• Productive resources which are required to produce a product are
called “ Factors of Production”. For example land, labour, capital and
organisation.
• Definition
• According to Benham “ anything that contributes to output is factors
of production”

2. Land
• Meaning
• The term ‘Land’ in economics is often used in a wider sense. It does not mean
only the surface of the soil, but it also includes all those natural resources which
are the free gifts of nature. For example soil,mines,water,climate,rivers, oceans
etc.

3. Characteristics of Land
• 1. Free Gift of Nature:
• 2. Fixed Quantity
• 3. Land is Permanent
• 4. Land is a Primary Factor of Production
• 5. Land is a Passive Factor of Production
• 6. Land is Immovable
• 7. Land has some Original Indestructible Powers
• 8. Land Differs in Fertility
• 9.Supply of Land is Inelastic
• 10. Land has Many Uses

4. Labour
• Meaning:
• In Economics labour mean any work whether manual work (i.e.
physical) or mental work under taken for securing income is
called labour.

5. Characteristics of Labour or Peculiarities or Features of labour
• 1. Labour is inseparable from labourer
• 2. Labour is a perishable factor
• 3. Labour is an active factor of production
• 4.Labour is a heterogeneous factor
• 5. Labour has imperfect mobility
• 6.Labour is inelastic
• 7. Labour is a human capital
• 8. Trade unionism is a factor of labour
• 9.. Labour is a mean as well as an end
• 10. cost of producing a labour cannot be determined

6.  CHARACTERISTICS OR FEATURES OF CAPITAL
1.Capital is man –made
2. Capital is productive
3.Capital is mobile
4.Supply of capital is Elastic
5.Capital is the result of labourers
6.Capital is Non-permanent

7. ADVANTAGES OR MERITS OF DIVISION OF
LABOUR
1.Greater increase in output
2.Introduction of machinery
3.Right man in the right place
4.Improvement in skill
5.Inventions
6.Saving in time
7.Saving in tools and equipments
8.Improvement in quality
9.Increase in employment

8. DISADVANTAGES OF DEMERITS OF
DIVISION OF LABOUR
1.Monotory
2.Retars human development
3.Loss of skill and interest
4.Danger of unemployment
5.Interdependence
6.Absence of responsibility
7.Evils of factory system
8.Employment of children

9. “ENTREPRENEUR”
Definition
According to Richard Cantillon “All Person engaged
in economic activity are entrepreneurs”
 Characteristics of Entrepreneurs
1.Hardwork
2.Risk Bearer
3.Motivator
4.Facing Uncertainity

10. 5.Flexibility
6.Self Confidence
7.Independence
8.Innovation
9.Communication Skills
10.Maintenance Public Relationship
11.Stress Taker
12.Feed Back

11. Functions of Entrepreneur:
• 1. Decision Making
• 2. Management Control
• 3. Division of Income
• 4. Risk-Taking and Uncertainty-Bearing
• 5. Innovation.

12. Scale of Production
1. Small Scale Industry
2. Large scale Industry
Advantages of Small Scale Industry
1. Close supervision
2. Economic Management
3. Personal attention to customer
4. Personal touch with the employees
5. Greater Adaptability
6. Independence
7. Nature of Demand
8. Nature of Industry

13. Large scale Industries
• Meaning:
• Large scale industries are industries with huge infrastructure man power and heavy
capital of more than rupees ten crores.
•
• Advantages of Large Scale Industries
• 1. Labour Economies
• 2. Technical Economies
• 3. Marketing Economies
• 4. Managerial economies
• 5. Financial Economies
• 6. Risk Bearing Economies
•

14. Disadvantages of Large Scale Industries:
• 1. Less Supervision
• 2. Individual Tastes Ignored
• 3. Absence of Personal Element
• 4. Possibility of Depression
• 5.Dependence on Foreign Markets
• 6. Cut-throat Competition
• 7. International Complications and War
• 8. Less Adaptability
•

15.  LOCALISATION OF INDUSTRY OR TERRITORIAL
DIVISION OF LABOUR
MEANING
Localisation of Industries refers to the concentration of
large number of factories producing the same commodity in a
particular area or place or locality or regin. For example
,match factories and fireworks factories are located in
Sivakasi. Localisation of Industries is called “Territorial
Division of Labour” or “Geographical Specialisation”.

16.  CAUSES FOR LOCALISATION OR FACTORS
1.Supply of Raw Materials
2.Supply of Power
3.Favourable Climate
4.Nearness to Market
5.Transport Facilities
6.Labour
7.Finance
8.State Aid

17. Advantages Localisation of Industry
• Reputation
• Skilled Labour
• Growth of Facilities
• Subsidiary Industries
• Employment Opportunities
• Common Problems
• Economy Gains
•

18. Disadvantages Localisation of Industry:
• Dependence
• Social Problems
• Limited Employment
• Diseconomies
• Regional Imbalances

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