![]() Land and labour are, therefore, primary factors whereas capital and entrepreneur are secondary factors. ![]() Land they say is appropriated from gifts of nature by human labour and entrepreneur is only a special variety of labour. Some economists are of the opinion that basically there are only two factors of production-land and labour. Thus, entrepreneur ship is a trait or quality owned by the entrepreneur. He is loosely identified with the owner, speculator, innovator or inventor and organiser of the business. ![]() What and where he will produce and by what method. He decides in what proportion factors should be combined. X who takes the risk of manufacturing television sets will be called an entrepreneur.Īn entrepreneur acts as a boss and decides how the business shall run. He hires the other three factors, brings them together, organises and coordinates them so as to earn maximum profit. How these factors are combined determines the success or failure of the outcome. These can be considered the building blocks of an economy. Land, labour, capital & enterprise The production of any good/service requires the. Economists define four factors of production: land, labor, capital and entrepreneurship. (iv) Entrepreneur:Īn entrepreneur is a person who organises the other factors and undertakes the risks and uncertainties involved in the production. Factors of production are the resources used to produce goods & services. The baker’s labor combined with the creativity and skills needed to actually bake and decorate it. Logically and chronologically, capital is derived from land and labour and has therefore, been named as Stored-Up labour. Wind is harnessed to produce electricity that powers the electric mixer and oven. An increase in the capital of an economy means an increase in the productive capacity of the economy. Examples are-machines, tools, buildings, roads, bridges, raw material, trucks, factories, etc. ![]() Land, therefore, includes all gifts of nature available to mankind-both on the surface and under the surface, e.g., soil, rivers, waters, forests, mountains, mines, deserts, seas, climate, rains, air, sun, etc. #4 factors of production and examples freeIt refers to all natural resources which are free gifts of nature. Alternatively, production is undertaken with the help of resources which can be categorised into natural resources (land), human resources (labour and entrepreneur) and manufactured resources (capital).Īll factors of production are traditionally classified in the following four groups: These are the four factors or production: 1. Some economists have identified capital finance, or monetary capital, as the fifth factor of production, but it is not wholly accurate to understand capital finance as a primary factor. Primary inputs are also called factor inputs and secondary inputs are known as non-factor inputs. Economists have established land, labor, capital and entrepreneurship as the four primary factors of production. It is primary inputs which are called factors of production. In the above example, soil, tractor, tools and farmer’s services are primary inputs because they render services only whereas seeds, manure, water and insecticides are secondary inputs because they get merged in the commodity for which they are used. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |