Factors of Production

Definition of Factors of Production

Factors of production are

resources for production

Classification of Factors of Production

Factors of Production

Natural Human Man-Made

Resources Resources Resources

Labour
Land and Capital
Entrepreneurship
LAND

Natural Resources:

LAND
LAND

Definition:

Resources provided by nature are

called land.
LAND

Characteristics:
1. A Gift of nature

2. Limited in Supply

3. Land is immovable
Capital

Man-Made Resources:

Capital
Capital

Definition:

All resources that are made by men

to assist production are capital.

Capital

Characteristics:

1. Man-made Resources

2. Increase in Productivity
Labour

Human Resources:

Labour
Labour

Definition:

Labour refers to human efforts,

both mental and physical that are

involved in the production process.

Labour

Characteristics:
1. Human Resources

2. Rest and Leisure

3. Improvement in Productivity
Labour Supply

Labour Supply
Definition:

The supply of labour is measured

by the total working hours of the

workers involved in production.

Labour Supply

Factors affecting Labour Supply:

1. Size of the population

2. The size of working population
3. The number of working hours
Labour Productivity

Labour Productivity
Definition:
Average labour productivity

measures the output per worker

per unit of time.

Labour Productivity

Factors affecting Labour Productivity:

1. Education and Training

2. Rewards and Benefits
3. Working environment
4. Health of workers
5. Mechanization
6. Division of labour
7. Management
Entrepreneurship

Human Resources:

Entrepreneurship
Entrepreneurship

Definition:

Entrepreneurship refers to human

efforts which organize all resources,

make decisions and bear risks.

Entrepreneurship

Characteristics:

1. Management and Organization

2. Major Decision-Making

3. Risk Bearing
Mobility of Resources

Type of Mobility of Labour:

1. Occupational Mobility

2. Geographical Mobility
Mobility of Resources

Factors affecting the Occupational

Mobility of Labour:
1. Monetary Rewards

2. Non-Monetary Rewards

3. Skills of Workers

4. Restrictions of Trade Unions and

Professional Associations

5. Age of workers
Mobility of Resources

Factors affecting the Geographical

Mobility of Labour:
1. Transportation

2. Political Factors

3. Economics Conditions of the Home

Country

4. Economics Conditions of Other Countries

5. Social Factors
End