Factors of Production
Anything that aids in production is an element of production. There are a variety of aspects that affect how every resource is converted into a useful product or service.
They are the raw materials for the process of manufacturing. They are the basis of the manufacturing process. Factors that affect production are factors that influence the output of the production.
Types of Factors of Production
Factors that affect production have been classified into four kinds.
Land
It covers the entire range of natural resources. All-natural resources, whether in the vicinity of the Earth, below on the Earth’s surface, or above the surface of the Earth are Land.
The land is used to produce products. It is the main and most natural source of production. Nature’s gifts of all kinds, like oceans, rivers, and climate, as well as land, mines, mountains, forests, etc., are land.
The cost for land is called rent.
Characteristics of Land as a Factor of Production
Nature is the gratuitous natural gift to the Earth.
The land is not a cost of production.
It’s immobile.
The area is fixed and has a limit in its supply.
Types of Land
Residential
Commercial
Recreation
Cultivation
Extraction
Uninhabitable
Labor
Every human effort that helps in the production process is labor. This effort could be physical or physical. It’s a human element of production. The individual puts their effort capabilities, skills, and abilities into creating.
The wage for labor is called the wage.
Characteristic
It’s a human element.
One cannot store labor.
There are no two kinds of work that are alike.
Types of Labor
Unskilled
Semi-skilled
Skilled
Professional
Capital
Capital is the term used to describe all human-made products used in manufacturing. It is a manufactured element of production. It comprises factories, machinery equipment, tools and the raw materials, wealth and so on.
Capital is the principal source of payment. Interest.
Characteristics
Capital is a human-made element of production.
It’s mobile.
This is a passive element of production.
Types of Capital
Fixed
Working
Venture
Entrepreneur
Entrepreneurs are those who integrate other elements of production together. He makes use of them in the process of production. He is the one who determines
What do you need to create
Where can you find the information to make
How to make
Someone who makes these choices and takes on the risk that comes with it is an business owner.
Landowners pay profit.
Characteristics
He has a lot of imagination.
He has a lot of administrative power.
An entrepreneur should be a man of actions.
Entrepreneurs need to have the ability to plan.
He must be an educated person.
He should have a professional approach.
Special Considerations
Although it’s not specifically mentioned as an element in the list, technology plays a significant impact on the production. In this sense technology has a broad definition. It can refer to hardware, software or a combination of both to help streamline manufacturing or organizational processes.
In a growing way, technology is the reason for the differences in the efficiency of companies. Technology, like money, is a facilitator of factors that affect production. Technology’s integration into a capital process improves its efficiency. For instance the use of robots in manufacturing could be a way to boost efficiency and output. In the same way, using kiosks in restaurants that serve self-service can aid businesses in reducing their costs for labor.
