Factors Of Production
The factors which man requires to produce commodities of his need are called factors of production. They are the following four :
1. Land
2. Labour
3. Capital
4. Organization/Entrepreneurship
Land:
Land is the first basic factor of production. It does not mean the surface of land on which we talk or live. It includes every thing which is gifted us free by nature. e.g: mountains, forests, rivers, oceans, climate, rain and minerals such as iron, coal, petrol etc.
Land Is Immoral:
Geographically, there is no mobility in land. In other words, land can’t be shifted from one place to another one. e.g: It is not possible to shift a fertile piece of land in the place of a barren piece of land.
Productivity Of Land:
It means the power or capacity of production of land. The more fertile piece of land givesmore production and it’s productivity is high. While the less fertile land, gives less production and it’s productivity is also low.
Characteristics Of Land:
1. Land is a free gift of nature.
2. It’s supply is limited.
3. All the pieces of land are not equal in fertility.
4. Geographically, there is no mobility in land.
Importance Of Land:
1. We get food from land.
2. We build our houses, shops, offices, factoriesand markets on land.
3. We get various kinds of minerals from underground mines.
4. Means of energy. e.g: coal, gas and oil are also found in land.
Factors Of Productivity Of Land:
1. Natural factors. i.e natural characteristics.
Water.
Climate.
2. Human resources.
3. Means of transportation.
4. Supply of capital.
Labour:
It means mental or physical work undertaken for reward. Labour can be mental or physical. e.g: teaching, work by a clerk and treatment by a doctor are mental work. Quite contrary to that, the work done by a labour, carrier, farmer and carpenter is physical work. The condition for labour is that it is done for wages whether they are in the form of money, goods and grains.
Importance Of Labour (Marshall):
A barren piece of land entrusted to an active and hard working man will become paradise while a fertile piece of land in the possession of a lazy man will become a desert.
Productivity Of Labour:
It means the productive power of labourer or power of performance.
Characteristics Of Labour:
1. Labour and labourer can’t be separated.
2. Labour can’t be stored.
3. Bargaining power of labourer is weak.
4. Productivity of different labourers is different.
Factors Influencing Productivity Of Labour:
1. Physical health of the labourers.
2. Moral qualities of the labourers.
3. Hereditary qualities of the labourer.s
4. Conditions of the work.
Capital:
It means that part of income or wealth which is spent to produce more wealth or increase income. e.g: machines, equipments, raw material, factories, roads railways lines, dams etc.
Productivity Of Capital:
It means power of production or power of performance of capital. If production increases to great extent with the help of capital, it’s productivity will be high and vice versa.
Importance Of Capital:
1. Development of agriculture depends on the use of latest machinery and inputs.
2. Industrial development depemds on the supply of capital.
3. Discovery of various minerals and their attainmentdepends on machines.
4. Productivity of labourers increases many times when they produce goods with the help of latest machines and tools.
Factors Influencing Productivity Of Capital:
1. Combination of capital with other factors.
2. Trained labour.
3. Proper use of capital.
4. Nature of raw material.
Organization/Entrepreneurship:
The factors which is needed to produce goods by the combination of land, labour and capital is called organization or entrepreneur. An entrepreneur organizes the system of the whole business. He combines other factors to do work. He pays them rewards and earns profit by selling produced goods. Sometimes he has to bear loss.
Importance Of Organization (Prof. Stonier and Hague):
“The basic difference b/w entrepreneur and other factors of production is that land, labour and organization can be hired while organization can’t be hired”.
Factors Of Organization:
1. Planning of business.
2. To attain best combination of factors of production.
3. To manage the business.
4. To make payment of rewards to other factors of production.
1. Land
2. Labour
3. Capital
4. Organization/Entrepreneurship
Land:
Land is the first basic factor of production. It does not mean the surface of land on which we talk or live. It includes every thing which is gifted us free by nature. e.g: mountains, forests, rivers, oceans, climate, rain and minerals such as iron, coal, petrol etc.
Land Is Immoral:
Geographically, there is no mobility in land. In other words, land can’t be shifted from one place to another one. e.g: It is not possible to shift a fertile piece of land in the place of a barren piece of land.
Productivity Of Land:
It means the power or capacity of production of land. The more fertile piece of land givesmore production and it’s productivity is high. While the less fertile land, gives less production and it’s productivity is also low.
Characteristics Of Land:
1. Land is a free gift of nature.
2. It’s supply is limited.
3. All the pieces of land are not equal in fertility.
4. Geographically, there is no mobility in land.
Importance Of Land:
1. We get food from land.
2. We build our houses, shops, offices, factoriesand markets on land.
3. We get various kinds of minerals from underground mines.
4. Means of energy. e.g: coal, gas and oil are also found in land.
Factors Of Productivity Of Land:
1. Natural factors. i.e natural characteristics.
Water.
Climate.
2. Human resources.
3. Means of transportation.
4. Supply of capital.
Labour:
It means mental or physical work undertaken for reward. Labour can be mental or physical. e.g: teaching, work by a clerk and treatment by a doctor are mental work. Quite contrary to that, the work done by a labour, carrier, farmer and carpenter is physical work. The condition for labour is that it is done for wages whether they are in the form of money, goods and grains.
Importance Of Labour (Marshall):
A barren piece of land entrusted to an active and hard working man will become paradise while a fertile piece of land in the possession of a lazy man will become a desert.
Productivity Of Labour:
It means the productive power of labourer or power of performance.
Characteristics Of Labour:
1. Labour and labourer can’t be separated.
2. Labour can’t be stored.
3. Bargaining power of labourer is weak.
4. Productivity of different labourers is different.
Factors Influencing Productivity Of Labour:
1. Physical health of the labourers.
2. Moral qualities of the labourers.
3. Hereditary qualities of the labourer.s
4. Conditions of the work.
Capital:
It means that part of income or wealth which is spent to produce more wealth or increase income. e.g: machines, equipments, raw material, factories, roads railways lines, dams etc.
Productivity Of Capital:
It means power of production or power of performance of capital. If production increases to great extent with the help of capital, it’s productivity will be high and vice versa.
Importance Of Capital:
1. Development of agriculture depends on the use of latest machinery and inputs.
2. Industrial development depemds on the supply of capital.
3. Discovery of various minerals and their attainmentdepends on machines.
4. Productivity of labourers increases many times when they produce goods with the help of latest machines and tools.
Factors Influencing Productivity Of Capital:
1. Combination of capital with other factors.
2. Trained labour.
3. Proper use of capital.
4. Nature of raw material.
Organization/Entrepreneurship:
The factors which is needed to produce goods by the combination of land, labour and capital is called organization or entrepreneur. An entrepreneur organizes the system of the whole business. He combines other factors to do work. He pays them rewards and earns profit by selling produced goods. Sometimes he has to bear loss.
Importance Of Organization (Prof. Stonier and Hague):
“The basic difference b/w entrepreneur and other factors of production is that land, labour and organization can be hired while organization can’t be hired”.
Factors Of Organization:
1. Planning of business.
2. To attain best combination of factors of production.
3. To manage the business.
4. To make payment of rewards to other factors of production.