2.

The Factors of Production

Factors of production
What are Factors of Production?
Factors of production are resources that are the building blocks of the economy; they are
what people use to produce goods and services. There are four factors of production

Four Factors of Production:

Land

Land includes any natural resource used to produce goods and services, such as
oil,
coal, water, wood, metal ores and agricultural products.

Labour

Labor as a factor of production refers to the effort that individuals exert when
they produce a good or service, the human resources required in the production
process, including skilled and unskilled labour

Capital

The manufactured resources required in the production process, such

as machinery, tools, equipment and vehicles

Enterprise

the skills a business person requires to combine and manage the

other three factors of production successfully

Rewards for Factors of production

Factors Rewards

Land Rent

Labour Salary/Wage

Capital Interest

Enterprise Profit

2. The Factors of Production 1