Factors of Production

The term ‘factors of production’ refers to the resources that are combined in the production process to create goods and services.

These are:

Land –     natural resource

Labour – human resource

Capital – man made resource

Entrepreneur – human resource

Land includes all natural resources such as soil, seas, rivers, forests, minerals, vegetation etc.

Labour is categorized as skilled, semi-skilled, unskilled or professional workers

Capital includes assets such machinery, equipment and vehicle owned by the company. Capital also includes raw materials, finished and semi-finished, goods, bank and cash balances.

The entrepreneur is the owner and risk taker in a business venture. He is responsible for combining all the factors of production.

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