He hires the other three factors, brings them together, organises and coordinates them so as to earn maximum profit. (iv) Entrepreneur:Īn entrepreneur is a person who organises the other factors and undertakes the risks and uncertainties involved in the production. Logically and chronologically, capital is derived from land and labour and has therefore, been named as Stored-Up labour. An increase in the capital of an economy means an increase in the productive capacity of the economy. Examples are-machines, tools, buildings, roads, bridges, raw material, trucks, factories, etc. Land, therefore, includes all gifts of nature available to mankind-both on the surface and under the surface, e.g., soil, rivers, waters, forests, mountains, mines, deserts, seas, climate, rains, air, sun, etc. It refers to all natural resources which are free gifts of nature. Alternatively, production is undertaken with the help of resources which can be categorised into natural resources (land), human resources (labour and entrepreneur) and manufactured resources (capital).Īll factors of production are traditionally classified in the following four groups: Primary inputs are also called factor inputs and secondary inputs are known as non-factor inputs. It is primary inputs which are called factors of production. Successful entrepreneurs appear to be geographically and occupationally mobile.In the above example, soil, tractor, tools and farmer’s services are primary inputs because they render services only whereas seeds, manure, water and insecticides are secondary inputs because they get merged in the commodity for which they are used.Some of the factors that encourage enterprise are: Lower taxes, less regulation and improved education Enterprise involves taking risks and making decisions.This figure provides a sense of the real expenditure on durable goods such as plants, equipment, and software that are being used in the company's operations. Net investment is the total amount of money that a company spends on capital assets, minus the cost of the depreciation of those assets. Net investment increases a company's stock of capital goods.Capital goods include items like buildings, machinery and tools. Capital goods are used to make other goods and services.Some of the factors influencing the size of the labour force are: Size of the population, the age structure of the population, retirement age, the attitude of women towards work, the school leaving age amongst others.The number of hours and the number of people that work determine the quantity of labour. ![]() It includes an artist's creation of a painting as well as the work of the pilot flying the airplane overhead. ![]() Labour resources include the work done by the waiter who brings your food at a local restaurant as well as the engineer who designed the bus that transports you to school. Labour: Labour is the effort that people contribute to the production of goods and services. ![]()
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