Factors of production are the sources required for the formation of a good or service. The factors of production primarily incorporate land, labor, entrepreneurship, and capital.
Land as a Factor
Land has a wide definition as a factor of production and can take on different structures, from farming land to business real estate to the assets available from a specific piece of land. Natural resources, such as oil and gold, can be extricated and refined for human utilization from the land. Cultivation of crops on land by farmers builds its worth and utility.
Labor as a Factor
Labor alludes to the exertion expended by a person to bring a good or service to the market. Again, it can take on different structures. For instance, the construction worker at a lodging site is part of labor as is the waiter who serves visitors or the receptionist who enlists them into the inn.
Capital as a Factor
In economics, capital normally alludes to money. In any case, money is not considered a factor of production as it is not directly engaged in the production of a product or service. Rather, it facilitates the procedures used in production by empowering entrepreneurs and owners of the company to buy capital goods or land or pay wages.
Entrepreneurship as a Factor
Entrepreneurship is the secret ingredient that joins all the other factors of production into a good or service for the public.