Check sibling questions

What are Factors of Production?

The Inputs required for Production of Goods and Services are called Factors of Production

 

Following are Factors of Production

Factor of Production Example
 Labour Workers who work in Factory are Required for Production
Capital Owners Provide Money to Run businesses called Capital, Bank also gives loan to run businesses
Land(Fixed Natural Resources) Land is a Fixed Natural Resource, Rent of Land used for Factory needs to be Paid
Entrepreneurship Owners who run the business take their Profit Share

 

Slide29.JPG

What are Factor Services?

They are the services rendered by factors of production.

Factors of Production Factor Services
Land Provision of Natural Resources for running busness
Labour Employment Services
Capital Provision of Money for purchase of different assets
Entrepreneurship Combining land, labour, capital to produce different goods and services

 

 

Slide30.JPG

What are Factor Payments?

The Remuneration Paid to Factors of Production is called Factor Payment.

Example

Wages are Paid to Human Labor (Workers)

Interest is Paid to Owners who Provide Capital

Rent is Paid for Use of Land

Profit Share is paid to Entrepreneurs for running business

Slide31.JPG

Assuming there are only 2 Sectors in Economy: Firm and Household

Which Sector Provides Factor Services to Whom?

Households provide factor services to Firms

 

Slide32.JPG

Which Sector gives Factor Payments to Whom?

Firms give Factor Payments to Households

Slide33.JPG

 

NCERT Questions

Question 1

What are the four factors of production and what are the remunerations to each of these called?

View Answer

 

Are ads bothering you?


Transcript

What are Factors of Production? The Inputs required for Production of Goods and Services are called Factors of Production Following are Factors of Production Factor of Production Labour Capital What are Factors of Production? They are inputs Required to Produce Goods and Servives Land Capital Labour Entrpeneirshop Goods Producrd What are Factor Services? They are the services rendered by factors of production. What are Factor Services? They are the services rendered by factors of production Example Factors of Production Land Labour Capital Entrepreneurship Provision of Natural Resources for running busness Employment Services Provision of Money for purchase of different assets Combining land, labour, capital to produce different goods and services What are Factor Payments? The Remuneration Paid to Factors of Production is called Factor Payment. What are Factors Services The Remuneration Paid to Factors of Production is called Factor Payment. Factors of Production Land Labour Capital Entrepreneurship Remuneration Paid Wages RENT interest Profit Share Assuming there are only 2 Sectors in Economy: Firm and Household Which Sector Provides Factor Services to Whom? Households provide factor services to Firms FACTOR SERVICES AND FACTOR PAYMENTS HOUSEHOLD FIRM Employee Factory Labour (Factor Services) Salary (Factor Payments) Landlord Factory Provides Land (Factor Services) Rent (Factor Payments) Investor Factory Provides Capital (Factor Services) Interest/Dividend (Factor Payments) Owner Factory Provides Entrepreneurial Service (Factor Services) Profit (Factor Payments) Which Sector gives Factor Payments to Whom? Firms give Factor Payments to Households FACTOR PAYMENTS WAGES INTEREST RENT PROFIT Paid to Human Labor (Workers) Paid for Capital (Shareholders) Paid for Fixed Natural Resources (Land) Paid to Entrepreneurs (Directors) SUMMARY FACTORS OF PRODUCTION LAND LABOUR CAPITAL ENTRPRENEURSHIP FACTOR SERVICE Transfer of Natural Resources Transfer of Labour Transfer of Money to Purchase Assets Transfer of Entrepreurial Services FACTOR PAYMENT NAME Rent Salary/Wages Interest/Dividend Profit share NCERT Questions Q1 What are the four factors of production and what are the remunerations to each of these called? -a- The four factors of production are: 1. LAND - It includes the transfer of natural resources like air, water, soil etc. The remuneration paid for land is called rent. 2. LABOUR - It includes the services of physical labour provided by humans. The remuneration paid for labour is called wages. 3. CAPITAL - It includes the money provided to make investments such as purchase of assets like machinery, building etc. The remuneration paid for capital is called interest. 4. ENTRPRENEURSHIP - It includes the services provided by individual who take risk of running the business. The remuneration paid for entrepreneurship is called share in profit. -ea-

Davneet Singh's photo - Teacher, Engineer, Marketer

Made by

Davneet Singh

Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 12 years. He provides courses for Maths and Science at Teachoo.