A factory, with several labourers and machines - Teachoo.png

  • The aim of production is to produce the goods and services that we want.
  • There are four requirements for the production of goods and services.

Requirements for the production of goods and services - Teachoo.png

  • The first requirement is land, and other natural resources such as water, forests, and minerals.
  • The second requirement is labor i.e, people who will do the work.
  • Some production activities require highly educated workers to perform the necessary tasks. Other activities require workers who can do the manual work.
  • The third capital is physical capital i.e, the variety of inputs required at every stage during production.
  • Items that come under physical capital are:
    1. Tools, machines, and buildings can be used in production over many years, and are called fixed capital.
    2. Raw material and money in hand - it is called working capital.
  • The fourth requirement is knowledge and enterprise to put together land, labor, and physical capital and produce an output. It is called human capital.
  • Every production is organized by combining land, labor, physical capital, and human capital, known as production factors.
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Davneet Singh's photo - Co-founder, Teachoo

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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.