Labour refers to the effort put by an individual to bring the product into the market. It is defined as human efforts that have been put both mentally and physically to earn an income is called labour as a factor of production. Therefore, even though the land is an essential component for most of the ventures, its significance can be increased or decreased based on the industry. If we take an example a tech company can easily use land with zero investment, whereas it is most important for a real estate venture. The land used by farmers increases the land value and its utility. All the natural resources from oil to gold can be extracted from the land. The land has a broad definition and as one of the four factors of production, it includes various things like agricultural land to commercial real estate. It mainly refers to all the natural resources which are in nature. So what are the four factors of production? In a capitalistic economy, the factors are owned by the individuals who use them for their profit. The type of economic system is decided by the ownership of factors of production. Primary inputs are also called factors of input, secondary inputs are known as non-factor inputs. are merged into the commodities which come under secondary inputs. If we observe from the above example tractor, soil, tools and farmer services are considered as primary inputs whereas water, pesticides, seeds, etc. In primary input, the services are rendered, wherein secondary input is merged into the commodities for which they are used. These inputs are classified into two types namely primary input and secondary input. For example, to produce rice, a farmer uses commodities like soil, tractor, water and so on.
Things that are used to produce commodities are called inputs. Factors of production definition can be highlighted as resources used by people to produce goods and services as the building blocks of the economy. In this article, we will answer the fundamental question of “what are the factors of production?” Let’s begin by understanding the meaning of factors of production.
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