wheat and maize.. Each factor of production has a unique type of payment associated with it, called factor payments. It d oes not mean soil or earth surface alone. Technology and the Factors of Production. This, therefore, means that production starts right from the ground. Simply stated, factors of production are the “ inputs” necessary to obtain an “ output.” However, not all the “inputs” that must be applied are to be regarded as factors in the economic sense. The factors of production can be used as … In economic terms, money is not a factor of production because it is a resource used to acquire resources that go into producing goods. Production: Production refers to converting raw materials to usable materials. Some of these inputs in a normal situation are “free.” It, however, is not only limited to creating things, but it also involves doing everything possible to ensure that the goods produced can satisfy human wants. These are workers. The factors of production include land, labor, capital and entrepreneurship. Money is not capital as economists define capital because it is not a productive resource. Even though entrepreneurship is not part of the classical factors of production, it is often added to the list as a fourth factor. Labor. It includes all those things which are found under and over the surface of earth. The factor payment for labor is referred to as “wages.” Land. Technology is not considered an official factor of production on our list, but it is significant within the realm of production. In economics, “factors of production” are the inputs used to create finished goods (i.e., the actual products we buy). A company's production can be represented graphically as a production curve. This factor of production includes machinery, tools, equipment, buildings, and technology. The reasoning behind this is that entrepreneurship often leads to innovation, new processes, or new products. d) A bank loan. This implies that the factors of production should be used in combination, so that the production target can be achieved. Businesses must constantly upgrade their capital to maintain a competitive edge and operate efficiently. L and as a Factor of Production:. Meaning and Definition: The term land in economics is used in a special sense. > You will notice that I did not include money as a factor of production. The production process of an organization can be efficient, if there is an optimal use of factors. The following is an adapted excerpt from my book Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less. A factor of production that have been produced for use in the production of other goods and services. You might ask, isn't money a type of capital? This includes land that is rented or purchased, as well as other components like natural resources and raw materials. 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