Those factors which are used in production of goods and services are known as factor of production like land, labour, capital and organisation.
The factors used in the production are called factors of production.
All of them contribute in the production. For their contribution, they are paid remuneration.
The factors of production are land, labour, capital and organization.
The payments made to the factors of productions are called rent, wage, interest and profits respectively.
These payments are called factor incomes.
They are made according to their contribution in production.
Generally, land is known as surface of the earth but in economics land means all things obtained free of cost from the nature.
The substances available above, below and on the surface of the earth free of cost from nature are land.
Other nature gifts are air, soil, rocks, sands forest, wind etc.
Land is limited and fixed in supply.
It differs from place to place and its composition cannot be changed.
It is immobile and a passive factor of production.
It cannot transferable but ownership can be changed.
We can neither destroy nor create the land.
Free gift of nature
Land is free gift of nature.
It cannot produce by human effort.
Human being does not pay any amount to nature to obtain the land.
Land differs in fertility and location
All land is not equal in natural.
Some are most fertile and others are less fertile.
Fertile land cost high whereas less fertile has the less value.
The piece of land located from the main city has more importance than other.
Passive factor of production
Land is passive factor of production.
It does not hold the production by itself.
It is immobile factor of production
Land cannot shift from one place to the other place.
Land is limited and fixed in supply.
It can neither be created nor destroyed.
Click on link for YouTube videos of Class 11:
Basic Journal Entries in Nepali
Basic Journal Entries
Journal Entry and Ledger
Trial Balance & Adjusted Trial Balance
Bank Reconciliation Statement (BRS)
Final Account: Class 11
Adjustment In Final Account
Capital and Revenue
Single Entry System
Goswara Voucher (Journal Voucher)
Labour is mental or physical service provided to others for earning money.
There should be economic objective behind the performance of any work.
The economic reward paid to labour may be in any form like wage, salary, commission, bonus, provident fund etc.
It is paid per unit of time and per the contract between an employer and an employee.
The unit of labour may be an hour, day, week, month and year and so on.
Labour is active factor of production.
It can yield the production by itself.
It handles other factor of production.
Labour is mobile factor of production.
It can moves from the one place to another place form one organization to another organization.
Labourer sells labour
The person who provides mental or physical service to others is called labourer.
The labourer sells service or labour hour only himself or herself.
Labour is not storable.
It is perishable factors of production.
If one labour hour is gone it cannot be regained.
Weak bargaining power
Labour has weak bargaining power.
In most of the countries bargaining power of labour is least among the factor of production.
However, it may have strong bargaining power if the trade unions are powerful.
Here, capital is durable physical assets used in the production.
It is man-made factor of production.
It includes machines, equipment, plants, tools and so on.
Capital is usable many times in production.
It has certain life period.
Interest is paid for the contribution of capital in the production.
It is passive factor of production.
It does not yield anything unless it is used with labour. Its supplies are variable.
Its use depends upon marginal physical productivity and interest rate, capital is depreciable every year.
Depreciation on fixed asset is called capital consumption allowance.
Capital is man-made factor of production.
Natural things are not capital.
All of the plants, machineries, equipment, buildings etc. are man-made.
Capital goods like machineries, equipment, vehicles etc. are transferable or transportable from one place to the other and from one use to the other.
Capital goods are passive factor of production because human effort is required to make it active.
Capital is depreciable
The value of capital goods used to decrease while using and while passing the time.
Decrease of the value of the machineries while passing time or while using it is called depreciation.
It depends on technology
Advanced technology of the nation’s leads to increase in capital stock where primitive technology leads to be lack of capital goods.
The supply of capital goods is elastic in nature.
It means it is possible to increase or decrease in capital stock in the nation.
The business organization is defined as a firm established and run to earn profit by producing and selling commodities.
Organization is the management body of any company which controls, supervise, monitor and formulates policy and strategy to obtain targeted goals.
The main objective of every business organization is to earn profit.
To maximize profit each firm has to fulfill demand.
There are mainly three types of organization.
They are Sole Proprietorship, Partnership and Joint Stock Company.
It employs all of other factors of production and bears the risk.
Risk bearing or uncertainties bearing
Organization bears all of the loss or uncertainties of the company.
Business cycle risk, competitive risks, technological risks, risk of governmental intervention, decrease in market price etc is beard by the organization.
The single goal of any business organization is to earn the profit.
It bears all of the risk and uncertainties to earn the profit.
Direction supervision and control
An Organization controls, supervise and provides direction to the whole company as an owner of it.
Introduction of new technology and explore of cheap raw materials, fuels and market is the special feature of organization.
Coordination is the special function of the organization.
It collects all of the factors of production and uses them in line of production.
Division of work
Entire work of the company is divided among the departments and employees by the organization.
It is the special role of the organization.
***** #EPOnlineStudy *****
Thank you for investing your time.
Please comment on article.
You can help me by sharing this article at your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल, जय युट्युब, जय सोशल मिडिया