Factors in Production Q4 - Estate Agent's Examination Part 1&2

Q.
Describe the following four (4) factors in production.

a) Labour (5 marks)

b) Land (5 marks)

c) Capital (5 marks)

d) Entrepreneurs (5 marks)

(20 marks, 2018 Q4)

Factors of production is an economic term that describes the inputs that are used in the production of goods or services in order to make an economic profit. The factors of production include land, labor, capital and entrepreneurship. These production factors are also known as management, machines, materials and labor, and knowledge has recently been talked about as a potential new factor of production.

Extract from tutor2u at https://www.tutor2u.net/economics/reference/factors-of-production

a) Labour

Labour is the human input into production e.g. the supply of workers available and their productivity
An increase in the size and the quality of the labour force is vital if a country wants to achieve growth. In recent years the issue of the migration of labour has become important. Can migrant workers help to solve labour shortages? What are the long-term effects on the countries who suffer a drain or loss of workers through migration?

b) Land

Land includes all natural physical resources – e.g. fertile farm land, the benefits from a temperate climate or the harnessing of wind power and solar power and other forms of renewable energy.
Some nations are richly endowed with natural resources and then specialise in the their extraction and production – for example – the high productivity of the vast expanse of farm land in the United States and the oil sands in Alberta, Canada. Other countries such as Japan are heavily reliant on importing these resources.

c) Capital:

Capital goods are used to produce other consumer goods and services in the future
Fixed capital includes machinery, equipment, new technology, factories and other buildings
Working capital means stocks of finished and semi-finished goods (or components) that will be either consumed in the near future or will be made into consumer goods
New items of capital machinery, buildings or technology are used to boost the productivity of labour. For example, improved technology in farming has vastly increased productivity and allowed millions of people to move from working on the land into more valuable jobs in other industries.

d) Entrepreneurship

Regarded by some as a specialised form of labour input
An entrepreneur is an individual who supplies products to a market to make a profit
Entrepreneurs will usually invest their own financial capital in a business and take on the risks. Their main reward is the profit made from running the business

Consider entrepreneurship as a factor of production, leaving debate aside. In markets, entrepreneurs combine the other factors of production, land, labor, and capital, to make a profit. Often these entrepreneurs are seen as innovators, developing new ways to produce and new products. In a planned economy, central planners decide how land, labor, and capital should be used to provide for maximum benefit for all citizens. Of course, just as with market entrepreneurs, the benefits may mostly accrue to the entrepreneurs themselves.

The sociologist C. Wright Mills refers to "new entrepreneurs" who work within and between corporate and government bureaucracies in new and different ways.^[11] Others (such as those practicing public choice theory) refer to "political entrepreneurs", i.e., politicians and other actors.

Much controversy rages about the benefits produced by entrepreneurship. But the real issue is about how well institutions they operate in (markets, planning, bureaucracies, government) serve the public. This concerns such issues as the relative importance of market failure and government failure.

In the book Accounting of Ideas, "intequity", a neologism, is abstracted from equity to add a newly researched production factor of the capitalist system. Equity, which is regarded as part of capital, was divided into equity and intequity. Entrepreneurship was divided into network-related matters and creating-related matters. Network-related matters function in the sphere of equity, and creating-related matters in spheres of intequities.^[12]

Ref:

https://en.wikipedia.org/wiki/Factors_of_production

tutor2u at https://www.tutor2u.net/economics/reference/factors-of-production