Factors of Production01

8/13/2019 Factors of Production01

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Economists have long recognized the three distinct factors that

people use to create the things theywant and that are referred to as

"factors of productionwhich are as follows :

Land

Labor

Capital Each factor is plays a unique role in the production of goods, andeach factor is clearly distinguishable from the other two.

!L#$ :

%or Economic purposes, Land refers to all #atural &esources

E'amples:

(inerals

)imber

&eal Estate

* E'planation:

Land is defined as everything in the universe that is not created

by human beings. +t includes more than the mere surface of the earth.

ir, sunlight, forests, earth, water and minerals are all classified as

land, as are all manner of natural forces or opportunities that are not

created by people. Labor uses capital on land to produce wealth. Every

tangible good is made up of the raw materials that come from nature !!

and because all people and other living things- have material needs for

survival, everyone must have access to some land in order to live.

!L/0& :

%or Economic purposes, refers to the actual wor1 an individual or

individuals does
http://www.landandfreedom.org/econ/terms.htm#Factorshttp://www.landandfreedom.org/econ/terms.htm#Wealthhttp://www.landandfreedom.org/econ/terms.htm#Factorshttp://www.landandfreedom.org/econ/terms.htm#Wealth


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E'amples:

2n!31illed Labor

3emi!31illed labor

31illed Labor

4rofessional Labor* E'planation :

Land is the passive factor in production. s such, land simply

e'ists. )o ma1e the gifts of nature satisfy our needs and desires, human

beings must do something with the natural resources5 they must e'ert

themselves, and this human e'ertion in production is called labor.

Everything that people do, to convert natural opportunities into human

satisfactions !! whether it involves the e'ertion of brawn, or brains, or

both !! is labor, to the economist.

6!C4+)L :

%or Economic purposes, Capital refers to man!made resources used

to produce something else

E'amples:

(oney

7or1ers

%acilities

E'planation :

7hen the stuff of nature is wor1ed up by labor into tangible

goods, which satisfy human desires and have e'change value, we call

those goods 7ealth. 7hen labor satisfy desires directly, withoutproviding a material good, we call that "3ervices"5 thus, economists say

that labor provides the economy with "goods and services".- 7hen

some of the wealth is used to produce more wealth, economists refer to

it as Capital. hammer, a screwdriver, and a saw are used by a

carpenter to ma1e a table. )he table has e'change value. )he truc1

which delivers the table to a retail store, the hammer and other tools !!

and even the cash register !! are all forms of capital .


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* Capital 8oods 9 Consumer 8oods :

Capital increases labors ability to produce wealth and

services too-. )herefore, there is always a demand for capital goods, and

some labor will be devoted to supplying those goods, rather than

supplying the consumer goods that directly satisfy desires.

;ow do we figure out how much of societys labor to devote to

capital goods vs. consumer goodsthcenturyhas introduced four basic factors of

production i.e. land, labor, capital and entrepreneur bac1edby the

state!of!the!art technology to this modern world. fterward, for the

optimum use of scarce resources and to avoid their misuse around

the globe, international institutions were developed in the late

>

th

century which provides international standards and guidelinesfor the best utilization of these resources. Consequently, ?@aizenA

and?)otal Buality (anagementA came into the picture and form the

modern concept of zero defective production. )odays %ree )rade

greements, (%#and before than these strategies European 2nion

was also an effort to use global resources in a better way. 3o far in

stcentury, the international institutions have set some standards

for the optimum use of scarce resources.

%actors +nstitutions 3tandards

Land

gricultural-

! !Labor 2nions, ;&( etc (inimum wages,

social security,

pensions, payschemes,

Capital %inancial institutions,

7orld /an1. +(% etc

3toc1 e'changes,

%inancial

3ecurities,

+nternational

currencies D or

etc


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Entrepreneur 3EC4,C/& in 4a1istan Corporate laws,separate business

owner concept

* gricultural land of 4a1istan :

mazing, even in the stcentury, this planet dont have any

international standards for the use of agricultural land, though all 6

remaining factors of production based on it, have. @eeping 4a1istan,

my homeland, as an e'ample lets loo1 at the intensity of the problem.

griculture constitutes the largest sector of our economy. (aFority of

the population directly or indirectly is dependent on this sector. +t

contributes about G percent of 8ross $omestic 4roduct 8$4- and

accounts for half of employed labor force and is the largest source offoreign e'change earnings. +t feeds whole rural and urban population.

%ederal bureau of statistics, 4a1istan Huly >>I-

* 4roducts :

4a1istan is an agricultural country having agricultural products

cotton, wheat, rice, sugarcane, fruits, vegetables5 mil1, beef, mutton,

eggs- as its main e'ports, best e'porter of orange and at number Jthin

mil1 production in the world. I>9percnt5of countrys population hasagriculture sector as a main source of income directly or indirectly.

4a1istan is blessed with the best agricultural land and weather

conditions of the world in two of its provinces named as 4unFab and

3indh, both these are the most populous provinces of the country with

good literacy rate as compare to other two i.e. /aluchistan and 3arhad.

0ver last decade, the 80K) of 4a1istan shifting the load of

e'ports from agriculture sector . 9percnt5 of total e'ports and

nd

to service sector J.6 9percnt5- to industrial sector. 80K) hasannounced many industrial states in different cities, two of them are

in &aiwind and %aisal abad. ll this is good but the question is

?whether the placement of industrial states and housing colonies are

rightA in 4a1istan as a special case and in general to the whole world.

s everyone 1nows 4unFab and 3indh enFoy the best agricultural

land, these increasing industrial states and housing colonies are

capturing this golden agricultural land of these provinces of 4a1istan

rapidly.


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Labor, capital, entrepreneur and technology can be developed with

human efforts5 can it be done with our land< Can human being

produce new lands

Factors of Production01

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