Factors of Production are the resources used for the production of goods and services.
Production is known as any type of activity that has an economic value. Any activity that generates money or income.
In Economics, land has a wider meaning compared to the English meaning of the word ‘land’. In economics, land consists of all the natural resources. For example, the atmosphere, the seas, soil, everything on the seabed etc.
The price given for the land is usually called ‘rent’
Labour is the all human efforts in the production. Labour does not only mean the labourers in an industrial site. If we take an example of a tourist resort, labour includes the receptionists, bell boys, bartenders, waiters, admin assistants, telephone operators etc.
The price given for the labour is usually called salaries and wages
Capital is the investment given to the business by the owner. It includes money input by the owner plus the fixed assets such as machinery and tools used for the production.
The price of the capital usually is interest payments.
An entrepreneur is a person or a group of people who bring together all the other factors of production. For example, the manager in a company gives direction to the plumbers, supervisors, admin assistants. He also manages the finance in the business and thinks of ways of increasing profit. The manager here is the entrepreneur.
Next Topic: Stages of Production