ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Firms buy productive resources in return for making factor payments at factor prices. The interaction between product and factor markets involves the principle of derived demand. A firm’s factors of production are gotten from its economic activities of supplying goods or services to another market.

Detailed explanation-2: -In economics, factors of production are the resources people use to produce goods and services; they are the building blocks of the economy. Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship.

Detailed explanation-3: -In the factor market, businesses are the buyers. They may buy, rent, or hire raw materials, land, or labor. Whatever a business needs in order to build, package, and deliver the products or services they provide must be obtained in the factor market. The sellers include producers of raw materials.

Detailed explanation-4: -Land is generally considered one of the most important factors of production. Certain industries rely on land more than others.

Detailed explanation-5: -The factors of production are land, labor, capital, and entrepreneurship. Businesses use the factors of production to produce the goods and services that we use every day. Individuals, businesses, or the government can own factors of production. Factors of production are an important part of any economy.