0Factors of Production (FOP)
Production of goods & services requires the use of certain resources. For eg : to produce whearc, a farmer needs land, labour, seeds, fertilizer, etc. So in this example land, labour, seeds and fertilizers are the factors of production.
Characteristics of FOP:
1. Jointly used in the production of a commodity: No single commodity can produce anything. We will have to combine all the factors together to produce something.
2. Physical Existence: all the four factors of production have a physical existence. They are tangible resources.
3. Use of factor services: An important characteristic of factors of production is that it is the services of the factors, rather than the factors itself, that contribute to production.
4. All the factors are not equally mobile: Labour and entrepreneur are mobile factors of production, as they can be transferred from one place to another. On the other hand land is immobile.
Classification s of FOP :
1.Land : land is a basic factor of production, because in every type of productive avtity land is needed. It is also a passive factor because it has to be used by labour and entrepreneur, for producing something.
2. Labour: Labour means all types of human work, physical and mental, done with a view to earn money.
3. Capital : all man made durable goods, which are used for further production of wealth are included in capital. Capital is a produced means of production.
4. Organisation : land, labour, and capital are natural, human and material means of production. No production is possible without bringing these factors of production together and using them in right proportions.
