PRODUCTION AND FACTORS OF PRODUCTION
PRODUCTION & FACTORS OF PRODUCTION
WHAT IS PRODUCTION ?
The act of making goods and services in order to satisfy various human wants is called Production. It must be remembered that the services of a doctor, teacher or lawyer are also production; but we cannot see these services.
FACTORS OF PRODUCTION
The labor, natural resources, goods made by human beings used in production are together called factors of production.
1. LAND
Land is the basic factor of production. All natural resources found on the surface and the interior of the earth and in the atmosphere come under this factor.
Land is the basic factor of production. All natural resources found on the surface and the interior of the earth and in the atmosphere come under this factor.
*Total availability of land is fixed. We can increase the use of land for a purpose, but total quantity cannot be changed.
*The Earth has no mobility. In the sense the earth goes round the sun it moves. But it cannot go where there are more rewards available. The Himalayas cannot be brought near the sea.
*The fertility of land is not uniform it varies from one region to another.
*Reward for land owner - RENT.
2. LABOR
Labor is an active agent of production. Any work done for payment, physical or mental is labor.
(To be continued......)
*The fertility of land is not uniform it varies from one region to another.
*Reward for land owner - RENT.
2. LABOR
Labor is an active agent of production. Any work done for payment, physical or mental is labor.
(To be continued......)
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