Factors of Production

This term refers to the resources that are combined in the production process to create goods and services

They are:

• Land

• Labour

• Captial

Entrepreneur

Land

This consists of all the natural resources on the earth including those in the sea and the atmosphere

Labour

This includes all human resources are needed to combine other factors of production to produce goods and services. It refers to both physical and mental ability this factor is very vital since people are needed to operate equipment and machinery and make decisions. Withput it other factors would be useless

Labour can be divided into:

Skilled- engineers, doctors, teachers
Semi-skilled- driver, plumber, data entry operator
Unskilled- watchman, vendor, labourer

Capital

This includes assets such as machinery and equipment. Captial also includes raw materials, finished and semi-finished goods, bank and cash balances

Entrepreneur

This is the ability to coordinate and combine the different factors of production in an effort to successfully run the business

Is often see as the 4th factor of prodcution this role is also carried out by various managers in the business

An entrepreneur has the following functions:

• creation of ideas

• takes initiative and risk

• raises finance to fund production

• determines what to produce, for whom to produce and how much to produce

• ensures that factors are used in correct proportions