Factors of production

related topics
{company, market, business}
{rate, high, increase}
{theory, work, human}
{land, century, early}

In economics, factors of production (or productive inputs or resources) are any commodities or services used to produce goods and services. 'Factors of production' may also refer specifically to the primary factors, which are stocks including land, labor (the ability to work), and capital goods applied to production. The primary factors facilitate production but neither become part of the product (as with raw materials) nor become significantly transformed by the production process (as with fuel used to power machinery). 'Land' includes not only the site of production but natural resources above or below the soil. Recent usage has distinguished human capital (the stock of knowledge in the labor force from formal education and job training as part of labor.[1] and sometimes entrepreneurship.[2] Sometimes the overall state of technology is described as a factor of production.[3] The number and definition of factors varies, depending on theoretical purpose, empirical emphasis, or school of economics.[4] The primary factors facilitate production but neither become part of the product (as with raw materials) nor become significantly transformed by the production process (as with fuel used to power machinery).

Differences are most stark when it comes to deciding which factor is the most important. For example, in the Austrian view—often shared by neoclassical and other "free market" economists—the primary factor of production is the time of the entrepreneur, which, when combined with other factors, determines the amount of output of a particular good or service. However, other authors argue that "entrepreneurship" is nothing but a specific kind of labor or human capital and should not be treated separately. The Marxian school goes further, seeing labor (in general, including entrepreneurship) as the primary factor of production, since it is required to produce capital goods and to utilize the gifts of nature. But this debate is more about basic economic theory (the role of the factors in the economy) than it is about the definition of the factors of production.

Contents

Full article ▸

related documents
David Ricardo
Cost push inflation
Fundamental analysis
Macroeconomics
Economy of Gibraltar
Opportunity cost
Discount
Present value
Freiwirtschaft
Market economy
Deadweight loss
Norwegian krone
Single market
Economic surplus
Consumer Confidence Index
Natural capital
The Nature of the Firm
Agricultural Adjustment Act
Secondary sector of the economy
Fordney-McCumber Tariff
Economy of San Marino
Kondratiev wave
Humphrey-Hawkins Full Employment Act
Transportation planning
Entrepreneur
Commerce
Economy of Anguilla
Creative accounting
Safe trade
Economy of the Netherlands Antilles