PDF chapter test TRY NOW
Factors of Production
Production and consumption are the two most important activities of human. For a production process to occur, raw materials have to transform into semi-finished or finished goods.
Production and consumption are the two most important activities of human. For a production process to occur, raw materials have to transform into semi-finished or finished goods.
The inputs are converted into an output. Land, labour, and capital is commonly referred to as inputs, and these inputs are called factors of production.
These three factors of production are essential to any production process; in addition to these three, the fourth factor of production is Entrepreneurship or organization because goods and services do not produce themselves but need some thought process to plan and implement manufacture.
The factors of production are further divided into Primary factors and Derived factors.
Primary factors\(=\)Land and labour. These are naturally given, and without them, no goods can be produced.
Derived factors=Capital and organization. These derived factors, when combined with the primary factors of production, raise total production.
Register for free to see more content