The Factors of Production In Economic System

All economic systems, including private enterprise systems, require resources to produce goods and services for the business. The factors used to produce goods and services are called factors of production. Factors of Production are divided into four categories – Land, Labor, Capital and Entrepreneurship. All four factors combine to produce goods and services in the business (see Fig. 4.1 below). Let’s not know the details about these four factors of production.

Land does not just mean land, but in this case the natural resources used to produce goods and services are therefore subject to land. Natural resources are all the resources that grow and grow on earth. All natural resources such as plants, minerals, oil, gas, land will be covered by the land.

Labor means all the human resources or human resources that transform raw materials into products and services. All the employees here, from the top management to the organization’s infrastructure, are all employees.

Capital It is the capital of any kind of machinery, machine, equipment or building used to produce goods and services. In this case, we often refer to capital as money only. It is important to remember that money itself is not productive. Saying that, it will be more clear, suppose I give you 1 lakh for business, and with this money you can make a business by selling it by generating profit. Now you can do business only with money? The answer is no. You have to spend money on this. Maybe with money you might buy a machine for bread production, a computer to maintain quality, to calculate, After the product is made, you will rent a building for warehousing. It is only when you produce money by consuming money through one means that money will be productive only. Money alone is never productive. Hopefully I understand the point.

Antroprenarasipa (Not entaraprenarasipa) or the initiatives being undertaken and the expertise of the risk to the rest of the group into three Factors of production are used in combination to produce goods and services. The heat in the fire acts as a catalyst for entropy and such. An entrepreneur or an entrepreneur is one or more people who are willing to take a risk in exchange for profit.

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