1. Land:- primary natural resources over which people have the power of ownership , control and
disposal, and can be used to yield income or organize/carry out economic activities – gift
of nature whose supply is fixed (no production cost) and whose reward is rent; include soil,
rivers/lakes, mineral deposits, forests etc: owners of land can only improve on its quality
since supply is fixed. Distinguishing characteristics: (i) fixed in supply (ii) no production
costs; land provides the site on/at which production takes place.
2. Labor:- human physical or mental effort directed to the production of goods and services; its
reward is wages/salaries. It has got three distinguishing characteristics from the other
factors:
(i) What is paid for/bought is the services NOT labor or labor force.
(ii) Its both a factor of production and the end to which production is under taken.
(iii) Cannot be separated from the owner/labor.
3.Capital:- Stock of wealth or goods which are not required for their own sake but for further
production of other goods i.e. any produced producer goods (any product of land
and labor which is reserved for further production) eg. fixed capital such as
machinery, buildings, vehicles; working/circulating capital like stock of raw materials
& work-in progress; reward – interest.
4. Entrepreneur: - the organizing aspect of resource combination in a production process which
involves risking of capital and decision making/organization/combination in anticipation
of demand; entrepreneurial ability refers to the organizational skills which combine all the
other factors of production (resources) for productive use; Its reward is profit . An
entrepreneur is easily identified in small businesses through his role but in large
businesses his function could be split between several managers and shareholders. Some
economists look at enterprise not as a separate factor of production but as a specialized
form of labor (consider self-employment or private practice.)
Wilfykil answered the question on February 6, 2019 at 07:53
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