Factors of Production

​Production refers to the creation of goods and services to satisfy our wants and needs.

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​Direct Production occurs when people provide all their own needs themselves. On the other Hand, Indirect production occur when people trade takes place and their needs are satisfy with the cooperation of others.

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There are only scarce resources to satisfy limited resources.

​The Scarce or limited resources which are used to produce the commodities people want to consume are collectively called FACTORS OF PRODUCTION.

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Land​

Land as a factor pf production includes not only the land itself but all natural resources found in the earth and sea​. Land includes mineral deposits such as gold, iron and diamond.​ It embraces sunshine and rainfall, rivers, pond and lakes, deserts and forest. In a sense, Land includes:

​Geographical surface area

​Rivers, lakes and seas

​minerals and chemicals

​Land is fixed in supply. It can not be increased, although the quality of land can be improved with fertilizer.

​Production can not take place without land

​Labour is the factor of production which is people's physical and mental contribution to the creation of good and services. This factor of production is rewarded with wages.

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​Labour is divided into three broad categories:

​1. Semi-Skilled & unskilled

​2. Skilled

​3. Managerial and professional

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