2. Factors of Production – Basic Concepts
Factors of production are essential inputs used to create goods and services, consisting of land, labour, capital, and entrepreneurship. Each factor has unique characteristics, rewards, and plays a critical role in economic activity, impacting productivity and overall economic growth.
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What we have learnt
- Factors of production are the resources required for the production of goods and services.
- The four primary factors are land, labour, capital, and entrepreneurship, each with specific characteristics and rewards.
- Efficient utilization of these factors leads to increased productivity and improved standards of living.
Key Concepts
- -- Factors of Production
- Inputs or resources used in the process of producing goods and services.
- -- Land
- Natural resources utilized in production, with a fixed quantity and immobility.
- -- Labour
- Human effort, both physical and mental, invested in the production process.
- -- Capital
- Man-made resources such as machinery and tools, used for further production.
- -- Entrepreneurship
- The ability to organize and manage production processes and take risks in business.
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