What are the factors of production?
From an economic point of view, the factors of production are those things that help allow goods and services to be produced. There are typically said to be four general types of factors of production.
The first of these is land. “Land” is a term we use to refer to anything that is not made by human beings. It can, therefore, include ores that are mined from the ground, lumber that is cut from the forests, or the actual land that is used by farmers to grow their crops.
The second factor of production is labor. This is, of course, the work that people do to make the goods and services. Every person working in a job is providing labor.
The third factor of production is capital. These are things that are made by human beings and which are then used to make goods and services that can be sold to consumers. For example, the machines that are used to make cars are capital. Companies buy those machines and use them to make the cars that we buy.
Finally, there is entrepreneurship, which is sometimes called “enterprise” in some countries. Entrepreneurship is the set of attitudes that allows some people to bring together the other factors of production to make new things. It is the risk-taking that must be done in order to make an economy grow. An entrepreneur, then, is someone who takes a risk to start their own company. Without such people, it would be hard for an economy to grow.