5 Factors of Production
- March 3, 2017
- Posted by: marlenedubois
- Category: Home Health Aide Training
Economic systems rely on certain inputs to operate effectively. Collectively, these inputs are called the factors of production. They are the resources businesses use to create wealth. There are 5 factors of production: land, labour, capital, entrepreneurship, along with knowledge. While knowledge will be as old as humankind, that will will be only recently that will that will has been recognized as a factor of production. Here are some tips to help you understand the 5 factors of production:
Labour refers to all natural resources. that will comprises things found in man’s natural environment which can be used in producing goods along with services. Examples include the earth itself (which forms the site where the enterprise will be situated), climate, vegetation, water, along with mineral deposits. The reward for land will be rent.
Labour will be another input of production. that will refers to human efforts both mental along with physical directed towards the production of goods along with service. Among contemporary writers along with scholars, labour will be distinguished by entrepreneurship along with knowledge. The reward for labour will be wages or salaries.
Capital refers to all man-made productive assets used to further production. These productive assets are not wanted for their own sake (the satisfaction they yield), nevertheless because they help to produce additional commodities. To better appreciate This particular input of production, we classify that will into two forms: capital Great along with capital fund. The former consists of such things as tools, equipment, buildings, fixtures, means of transport, as well as raw materials inside the process of manufacture, along with inventory for sale. Capital fund, on the additional hand, refers to money or cash that will will be available for investment in business enterprises. that will could be inside the forms of stocks, shares, loans along with debentures. The reward for capital will be interest.
Entrepreneurship has been distinguished by labour, because, labourers cannot make a contribution without the entrepreneur. The labourers need to find work in order to make a contribution, along with the entrepreneur makes This particular job available. Without the entrepreneur, all additional factors of production are of little economic value. The entrepreneur identifies a business opportunity, organizes the additional factors, along with assumes the risks of success or failure of the business venture.
Entrepreneurship, simply put, will be the exploitation of opportunities that will exist within a market through the combination of additional factors of production. The reward for entrepreneurship will be profit.
We have distinguished This particular factor, knowledge, because that will will be increasingly being recognized as a vital factor of contemporary business. that will will be distinct by labour. that will will be a critical along with meaningful resource in any economy. Knowledge will be fluid. that will can be captured, codified along with transmitted. While others, cannot be completely articulated, for example, skills along with competencies (tacit knowledge) can only be shard through interaction with people along with the environment. Knowledge resides inside the mind of the holder or knower, along with when that will will be transmitted that will becomes information.
Knowledge will be a fluid mix of framed experience, values, contextual information, along with expert insight that will provides a framework for evaluating along with incorporating brand-new experiences along with information. that will originates along with will be applied inside the minds of knower. In organizations, that will often becomes embedded not only in documents or repositories nevertheless also in organizational routines, processes, practices, along with norms. (Davenport & Prusak, 1998: 5)
Knowledge as the fifth factor of production will be increasingly being recognized as the driver of productivity along with economic growth. along with that will has certain unique characteristics that will differentiate that will by physical labour. These are:
- Knowledge will be expandable along with self-generating: As an engineer or doctor gets more experience, his knowledge base will increase, along with
- Knowledge will be transportable along with shareable: This particular means that will that will will be easily moved along with shared. This particular transfer, however, does not prevent its use by the original holder.
that will has been emphasized that will knowledge resides in people’s minds, expectedly, the reward for knowledge will be wages or salaries.
Knowledge, entrepreneurship, labour, capital along with land has described as factors of production needed in any economic system, so as to operate effectively. The rewards for these factors were highlighted.