1 Answer | Add Yours
An argument can be made for either side of this question. On the balance, I think I would say that different factors of production can be more important in different kinds of economic activity. Overall, they are probably all about equal.
It is not possible to have any kind of economic activity without having all of the three main factors of production (excluding entrepreneurship). Entrepreneurship is necessary in order to have new forms of economic activity. To this extent, all of the factors of production are equally important. No economic activity can happen without all three of them.
However, different factors will be more or less important to different economic activities. For example, if one is engaged in subsistence farming, land is more important than the other factors. Labor and capital are important, but land is irreplaceable. By contrast, for a company like Microsoft, labor is the most important thing. Microsoft needs innovators who can keep coming up with new products more than they need any other factor. In modern industry, capital is, arguably, the most important thing. Modern factories need good machinery perhaps more than they need anything else. Finally, for any new economic activity (for example, getting Microsoft started as opposed to keeping it going), entrepreneurship is the most important factor.
Thus, an argument could be made that they are all equal, but I would say that each factor of production is most important in certain circumstances.
We’ve answered 327,850 questions. We can answer yours, too.Ask a question