Karthikeyan

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Factors of production are the resources used to produce goods and services. They are the basic inputs needed for all kinds of production.
Economists divide the factors of production into four main groups:
Land
Labor
Capital
Entrepreneurship

Each factor plays a different role in the production process and earns a specific reward.

The Four Main Factors

Meaning: Land includes all natural resources that are used to produce goods and services. It is not just soil — it includes water, forests, minerals, sunlight, and air.
Features:
- It is a gift of nature.
- It is limited in supply (you cannot increase land easily).
Examples: Farmland, rivers, coal mines, forests.
Reward: Rent — the income earned by the owner of land.

Meaning: Labor refers to human effort used in production — both physical and mental.
Features:
- Labor is active — it makes production happen.
- It is perishable — cannot be stored for later use.
- Each worker has different skills and efficiency.
- Labor is mobile — can move from one job or place to another.
Examples: A farmer, doctor, teacher, or factory worker.
Reward: Wages — the payment for work done.

Meaning: Capital means man-made wealth used to produce more goods and services. It includes machines, tools, buildings, and money used in business.
Features:
- It is man-made.
- It is reproducible — can be increased by saving and investing.
- It helps in increasing productivity.
- It earns interest for its owner.
Examples: Factory machines, tractors, computers, vehicles, buildings.
Reward: Interest

Meaning: Entrepreneurship is the ability to organize and manage the other three factors — land, labor, and capital — to produce goods and services. The entrepreneur also takes risks in starting and running a business.
Features:
- Takes decisions about what to produce and how to produce it.
- Bears risk of loss.
- Innovates — finds new methods or ideas to improve production.
Examples :Business owners, startup founders, company managers.
Reward: Profit

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