Factors of production ( Land, labor, capital and organization).

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Hello guys! I hope you'll be fine and in good health. The topic of my blog is the factor of production. Factors of production are the resources that are used for producing goods & services are known as the factors of production. These factors of production could be land, labors, capital and organization or enterprise. In this blog, I'm going to discuss two factors of production Land and Labor and factors affecting the efficiency of each factor of production. Wikipedia defines the factor of production as:

"In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, finished goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relationship is called the production function."

                                     SOURCE: Wikipedia                           


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                                               Land (Earth)


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"In economics, land comprises all naturally occurring resources as well as geographic land."

                                     SOURCE: Wikipedia

The land is the most important factor of production. Land includes all the geographical elements that can be used in the production. It includes all the resources which are gifted to us by nature. These gifts are categorized into two, one of them is exhaustible and second is non-exhaustible. Exhaustible are those which cannot be used again after extraction. Example of them could be iron, gas, oil and all the mineral. While non-exhaustible are those which could be renewed, an example of them could be agricultural goods like wheat, rice, and grains which could be produced again as long as the land is fertile.

The efficiency of Land:


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There are several factors that affect the efficiency of land and those factors are a lot, but I'm going to discuss a few of them. I'm going to discuss only three of them.

(1) Atmospheric factors:


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The production of land is affected a lot by the atmospheric factors. Let’s say that a country where there is almost no rain throughout the year, you can't grow crops or agricultural goods there. Same goes for the desert, it's not a place to grow agricultural goods. These agricultural goods cannot be grown in the wettest place in the continent, where it's always rain. Do grow agricultural goods, we need to focus on a place where there is a balance of both rain and sunlight. Hot and cold weather also affect the production, you simply can't cultivate agricultural goods in the snowy land, you just can't.

(2)   Experience factors:

The land has natural resources, but all the resource produced by the land are not natural resources that only need extraction from land, some of them have to be cultivated. Now for cultivation depends upon the human experience. Give an experienced person a barren land and he will make it fertile while giving a un-experienced person fertile land and he will make it a barren land. So, to maintain the efficiency of land, labor that works on that land should have experience.

(3) Investment factors:


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Land does not produce goods & services on its own, it needs labor and labor are not for free they are costly. Owner or borrower of the land has to pay that labor to work on it, for a certain sum of money as a reward for their hard work. If there is a problem of investment, then the production of land can easily decrease. When there is not enough capital then owner or borrower of the land cannot keep labor working for long and he has to shut down his production eventually.



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"Labor economics seeks to understand the functioning and dynamics of the markets for wage labor."

                                       SOURCE: Wikipedia

Labors or in modern term employees are also quite important in the factor of production. Labors are not only people who work physically but also physically. Or in another word physical or mental work undertaken for the purpose of earning money for your hard work, is known as a labor. Now labors that are categorized into mental work, all of them are the workers who provide services like doctor, advocate, bankers, and teachers. While workers categorized into physical work could be factory workers or construction workers. Labor is different from all the factors of production, unlike other factors this factor is a living being.

The efficiency of labor:


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The efficiency of labor means, the quality, and quantity of the goods & services labor produce is known as the efficiency of labor. There are many factors affecting the efficiency of labor, I'm going to discuss three of them.

(1) Management factors:


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Management of any firm or organization plays an important role in the efficiency of the labor or employee. If employee or labor is getting his or her incentives and benefits of the job, secondly employer and employee have a good relationship. If management is keeping the employees happy then the efficiency of the labor would be high and same could be said that if the relationship in between employee and employer is not good then the efficiency of the labor would be low.

(2) Technological factors:


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Factors of technology can increase or decrease the efficiency of the labor. An organization which is not well equipped with the latest technology and machinery would surely have low efficiency of labor because in this era all the work is done on machines. And the organization which is well equipped with the latest technology and machines would have high efficiency of labor as compared to the one which is not equipped with the latest technology.   

(3) Health factors:


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Health factors can affect a lot in the efficiency of labors, a labor must be healthy and physically strong. If the labor is not healthy and is physically weak than the production or efficiency of the labor would be low and vice versa.


It is very important for a businessman or entrepreneur to keep in mind the factors or production and how the efficiency of the factor decrease or increase, in next blog, I'm going to discuss next two factor of production in my next blog. There a probably a lot of things that, I have missed but for sure if you find any mistakes in the blog, do let me know. 



          This blog is written and published by Haider-Ali-Nasir-77 for Bitlanders.




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Born realistic! A person, who push his limit, I'm the one.
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