What are factors of production?

Factors of production are the economic resources that are used to produce goods and services.

There are four factors of production,which are:

• land
• labour
• capital
• entrepreneurship

Factors and their Rewards

What is land?

Land is defined as a range of natural resources .It is made up of all the free gifts of nature .land includes all the factor services available naturally, either above or beneath the earth's surface.

What is labour?

Labour is the human energy an mental skills used to produce economic goods.

Some jobs involve more physical labour ,eg. construction workers, sugarcane cutters, while others focus on mental skills,eg. a business manager making business plans. 

What is Capital?

Capital refers to goods used to produce more goods and services . these goods are not wanted for their own sake but,to help in the production of other goods and services. the purchase of capital goods is investment , such as the the purchase is not part of the current consumption. therefore capital is any man made goods used in production, to generate earnings over a period of time ,eg. factory building machinery and equipment . Capital tend to be durable.

What is entrepreneurship?

• The entrepreneur performs 2 functions:
• He combines the other 3 factors of production in a profitable manner.
• the entrepreneur is the factor that  bears the risk of production. this risk involves paying for the other factor inputs required to produce goods and services before any revenue is received from selling the goods produced entrepreneurs are prepared to take risks to achieve rewards mainly in the form of profit.