Land as a factor of production

Capital is made up of all of the tools and machinery used to produce a good or service. By cultivating it more intensively, the farmer tries to take the utmost out of his land.

Economic Definition of the Four Factors of Production

Land or natural resource — naturally occurring goods like water, air, soil, minerals, flora, fauna and climate that are used in the creation of products.

One way the company might cut costs is by laying off workers and increasing the workload required of its remaining employees. Since these qualities seemed to distinguish entrepreneurship from other forms of labor or capital, many people have come to view entrepreneurship as a factor of production in its own right.

This resulted in an influx of workers into cities, where they were able to or were forced to sell their labor to employers. It includes oceans, lakes and rivers, mineral deposits, rainfall, water-power, fisheries, forests and numerous other things which nature provides and man uses.

The economic prosperity of a country is closely linked with the richness of her natural resources. The "instruments of labor" are tools, in the broadest sense. More Detailed Information The availability of the factors of production for use as economic resources was not an inherent feature of the world, then, but the result of specific historical changes.

Factors of Production: Land, Labor, Capital

Financial capital — This is simply the amount of money the initiator of the business has invested in it. The paper company above, for example, might find that at a certain price, its paper products sell rapidly and ensure it a comfortable rate of profit.

An entrepreneur finds ways to combine the other factors of production — land, labor and capital — to produce a product and make a profit. We can place different forms of energy on a scale of utility depending on how useful it is for creating a product.

Factors of Production : Land, Labour, Capital and Entrepreneur | National Income

Such minute variations are not found in any other factor of production. All such things make a difference in the quality of the land. Passive Factor of Production Land by itself cannot produce anything for the company.

Those who controlled the land controlled not just the natural resources but also the very people who lived on the land, and those in control had the authority to regulate the work these people did.

Thus a market for labor developed. Physiocracy[ edit ] Physiocracy from the Greek for "government of nature" is an economic theory developed by a group of 18th century Enlightenment French economists who believed that the wealth of nations was derived solely from the value of "land agriculture" or "land development" and that agricultural products should be highly priced Classical[ edit ] An advertisement for labor from Sabah and Sarawak, seen in Jalan Petaling, Kuala Lumpur.

The compromise between these opposing forces will set the terms for the production of any particular good or service. The value of the land depends on its physical location and the resources it contains.

Labor by an uneducated and untrained worker is typically paid at low prices. Man cannot create these resources. Labor includes not just the number of employees but also the various abilities called for from workers. An illustration of the above is the difference in markets for robots in China versus the United States after the financial crisis.

The four factors of production are land, labor, capital, and entrepreneurship. They are the inputs needed for produce all the goods and services in an economy.

That's measured by gross domestic product. Land as a Factor of Production.

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If you continue browsing the site, you agree to the use of cookies on this website. Nov 04,  · Factors of production refers to inputs required for conducting production. Input is the starting point of every production activity. According to Prof. Benham, " Anything that contributes towards output is a factor of production.".

Land is a passive factor whereas labour is an active factor of production. Actually, it is labour which in cooperation with land makes production possible. Land and labour are also known as primary factors of production as their supplies are determined more or less outside the economic system itself.

Land as a Factor of Production, The term land in economics is used in a special sense. It does not mean soil or earth surface alone. Companies use components or factors to manufacture products.

The factors of production are land, labor, capital and entrepreneurship. Land refers to soil, metals and all other natural resources. Labor is all of the work carried out by the employees of the company.


Land as a factor of production
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Economic Definition of the Four Factors of Production |