Why Are You The Factors Of Production Necessary For The Production Of Goods And Services?

Definition: In economic science, factors of production, as the proper noun signifies are the inputs or say resources acquired by the business firm to use them in the production of goods or services, so as to earn a profit.

The discussion 'product' refers to a systematic process of converting the inputs, into finished products, which tin can be goods or services. For this purpose, the production has to pass through different processes, stages and easily, to reach the last consumers, in its consumable form. The production level is based on the quantity of inputs and production capacity of the house.

Factors of Product

Basically, there are 4 factors of product, on which the entire process depends. These Factors are: factors of production

Land

With respect to factors of production, the word 'country' has a dissimilar significant in economics, equally it covers all gratuitous gifts of nature such as natural resources, air, light, water, natural vegetation, fertility of soil, heat, etc. rather than merely an area or earth's surface. The economic reward for using the land is rent.

Salient features:

The land is a nature's gift to us, which does non need whatsoever effort of human beings to create it or avail information technology for the purpose of product.
All the natural resource are limited in supply, and so does the country. This is what makes it different from the residuum of the factors of production, i.e. it cannot be increased with an increment in need.
It is e'er-lasting, and it is indestructible in nature, as well as information technology can be put to various uses.
The land is immobile every bit it cannot exist shifted from 1 place to another, too as it is a passive gene of product, as it cannot produce anything on its own.
It is heterogeneous in that no two surfaces of country can exist exactly similar as they vary in quality and condition.

Labour

Labour refers to the homo resource who exerts physical or mental efforts, to produce the goods or services for specific consideration, i.east. bacon, or wages.

Salient features:

Labour is direct associated with human efforts and due to this reason off-white wages, good treatment, work environment and working conditions are necessary for labourers.
Information technology is perishable, pregnant that if labour has not worked on a item day, it cannot be fully recovered past overtime working on some other day.
It is an active factor of production, whose participation is important for other factors such as land and capital to produce.
Labour is heterogeneous in nature, i.e. the efficiency of labour differs from one person to another, which depends on his skills, competency, productivity, etc.
Information technology is mobile in nature, as labourers can move from one identify to another or from 1 business firm to another to find suitable piece of work for them.
Labour'sbargaining ability is non very potent and convincing. Labour cannot be stored and due to this reason, they get ready to work at the wages decided by the employer.
Labour supply can be changed, just non instantly so the supply is inelastic. Further, the supply is based on a number of factors like the size of the population, desire to work, attitude towards work, age and sex limerick, etc.

Capital

Capital tin exist understood as all the human creations, such every bit tools, plant and machinery, equipment, money, etc. which are used for further production of wealth. In better words, capital is not an original and master ways of production, rather it is a produced one.

Salient features:

It is not a gift of nature, as state, instead is a man-made gene of product.
It is a secondary and artificial factor of product.
It is mobile, as it can easily exist transferred from one place to another.
It has an opportunity price, equally it can be put to alternative uses.
The supply of capital tin can be increased or decreased according to need. And then, the supply is relatively elastic.
Capital is durable in nature, it is long lasting, simply depreciates over time.

Entrepreneur

An entrepreneur is the about important factor of product, without which the product process cannot be initiated as the rest of the factors are disorganized or dispersed at diverse locations and it is the entrepreneur who takes charge of arranging and assembling them, to offset the process of production.

An entrepreneur performs the role of an innovator, manager, organizer, leader, risk-taker, and coordinator. The reward of an entrepreneur is profit.

Salient features:

He/She is the one who plans, organizes, coordinates, controls and allocates the other means of production.
An entrepreneur is ready to bear the risks and uncertainties associated with the process of production.
He/She makes plans and strategies for the future moves and actions, as well every bit takes all the decisions for the firm chop-chop and logically.
He/She has the ability to embody innovation into product and services.
An entrepreneur is a change agent, who brings change in the firm's process, to compete effectively in the concern environment past adopting mod techniques of production.

Factors of product, plays a crucial part in our lives, as even a small pivot cannot be created if any of the factors of production are missing or not actively participating.