Factors of Production

Factors of production are a vital concept in economics. It is defined as the particular inputs that are highly needed for producing services and goods. The factors that are generally considered include entrepreneurship, capital, labor, and land. These four basic factors involve resources that are highly needed for the creation of services and goods and are generally measured with the help of a country’s GDP as their gross domestic profit. 

Factors of production and its importance

An increase in production will ultimately lead to economic growth. This is measured through the GDP. GDP can be merely defined as a measure for representing the overall production of all services and goods in an economy. An increase in economic growth ultimately raises the living standards through raising wages and lowering costs. 

The Factors of production Class 9

Factors of production are a broader concept. To understand this firstly the four main factors of production should be carefully studied which has been discussed earlier. However, production managers have formulated five factors of production. These are generally referred to as the 5 M’s. The five factors affecting production according to them are machines, men, materials, method, as well as money. In a similar pattern, seven factors affecting production can also be studied. Within these seven factors, Land is most important and the other natural resources generally considered include Building, Tool, Machinery, Labour, Raw Materials, Factory, as well as Enterprise

The ninth factor in the factors of production is Working capital. Working capital is defined as the cash and raw material on hand that is utilized for the manufacturing of goods. Working capital is also known as current capital.  The meaning of capital must be properly understood. Capital is essentially the money used at the time of starting a business. Simply it is the resource that can either be money in cash form or the form of the kind. These can later be used for purchasing inputs and raw materials. 

Working capital can also be explained through the example of class 9. Money and raw material in hand are generally known as working capital. Machines, buildings, tools, etc are essentially fixed capital, and utilization of these can be done in production over some time over several years. Contrary to this working capital is defined as money and raw materials in hands which is known as working capital and are quickly used up. 

The most abundant factor of production

In economics the most abundant factor of production is land. In the ever-changing world economy, an exponential increase in the complexity of the production process can be noticed. But regardless of how much evolution occurs in economics, the four main factors of production remain unaltered. Every production factor that falls under the land factor doesn’t require any supply price. This means that land can be utilized without paying anything to the actual owner. In this regard, it should be mentioned that land is a fixed production factor. The existing quantity of land will never change irrespective of how much human power is used. This means that change within demand can never change the overall land supply.

Next, it should be mentioned that land is indestructible and has some permanent powers. Most features that are associated with land cannot be normally affected by humans. Humans can only upgrade or degrade several characteristics of the land to some extent. The amount of land or the land itself can never be destroyed. Another important feature of land is that is immobile and has multiple uses. The land is a static factor that cannot be changed and the different uses of land include cultivation agriculture, etc. 

Conclusion

The core subject on which the article has been written is related to business economics. The main topic that has been discussed is the factors of production in economics. Throughout the articles, it can be observed that there are four main factors of production namely land, capital, entrepreneurship, and labor in which land is the most redundant factor. In addition to this, the factors of production have also been discussed in this article.