Introduction of factors of production
Factors of production refer to those things which contribute towards production(output). In other words, factors of production are any things which are used to produce new goods and services. The basic factors of production comprise of:
a.land,
b.labour,
c.capital and
d.organization(entrepreneur).
All the factors of production like land, labour, capital and entrepreneur are required in combination at a time to produce a commodity. These factors are also called inputs and the production is called output.
1. Land
In common sense, Land means soil or land surface. But in economics, the term land is used in wider sense. land includes all those goods that are provided free to man by nature. Land stands for all-natural resources which yield an income or which have exchange value. Land is an essential factor for production because It provides place for production.
Therefore, it may be considered that land includes everything which is by nature and on which man works with his labour for-production /wealth.
Characteristics/ Features of Land
Land as a factor of production is quite peculiar. The characteristics of land are as follows:
i. Free gift of nature:
Land is free gift of nature. It is not produced by man. Man can make it more useful only.
ii. Limited in area:
Land is limited in area. Man cannot increase or decrease its supply. Man can only clear land or change its use.
iii. Permanent in nature:
Land is permanent in sense that it cannot be completely destroyed. Sometimes, it can be changed or moved due to natural disaster.
iv. Land lacks mobility:
Land lacks mobility in geographical sense. Land cannot be moved from one place to another. i.e., It is fixed in a place.
v. Infinite variety:
Land is not manmade. It has infinite varieties. Some land is barren while other are fertile. In same manner, land nearer to the town enjoys a better situational advantage than the land located in village.
vi. Passive factor for production:
Land cannot do anything itself. Man has to invest money or other factor of production to produce something out of it.