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WEEK 9.
Topic: Factors of Production
The term factor of production is defined as all the visible and invisible resources are combined together for the purpose of production of goods and services. There are four factors of production.
(a) Land: Land refers to gift of nature or all the natural resources available, applied and used for production without the help of a man. It includes the fixed natural land and other natural resources such as water, forest, mineral deposits etc. The reward for land is rent.
(b) Labour: Labour means all human efforts physical or mental, skilled or unskilled directed toward the production of economic goods and services. The reward of labour is wages and salaries.
(c) Capital: These are wealth used for the production of further wealth. Capital consists of machinery and equipment, buildings, motor vehicles, tools, raw materials and money. The reward for capital is interest.
(d) Entrepreneur or organization: This is a factor that organizes and coordinates the human and material resources in the production of goods and services. The entrepreneur is the initiator, innovator, risk-bearer, and decision-maker. These functions distinguish entrepreneurship from routine managerial activities. The entrepreneur gets profit as a reward for his services. Entrepreneur can also be called management.
Evaluation:
- Explain the term factors of production
- Explain the four factors of production.
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