ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The factors of production in an economy are its labor, capital, and natural resources. Labor is the human effort that can be applied to the production of goods and services. People who are employed or would like to be are considered part of the labor available to the economy.

Detailed explanation-2: -Labor: Labor constitutes one of the important factors of production. This factor involves human services and efforts for the production of goods or services.

Detailed explanation-3: -In contrast, many economists today consider “human capital” (skills and education) as the fourth factor of production, with entrepreneurship as a form of human capital. Yet others refer to intellectual capital.

Detailed explanation-4: -In contrast to natural resources, capital is a resource that has been produced but is also used to produce other goods and services. This factor of production includes machinery, tools, equipment, buildings, and technology.

Detailed explanation-5: -The productive factors are commonly classified into three groups: land, labour, and capital. The first represents resources whose supply is low in relation to demand and cannot be increased as the result of production.