Q.Name the four factors of production and their respective rewards.

Factors of production are the inputs used to produce goods and services — land, labour, capital and organisation (enterprise).

Explanation

Factors of production are the productive resources that are combined to produce goods and services. Economists classify them into four groups:

• Land — all free gifts of nature such as soil, minerals, water and climate; its reward is rent.
• Labour — any mental or physical human effort used in production; its reward is wages.
• Capital — man-made means of production like machines, tools and buildings; its reward is interest. …

Factors of production are the productive resources that combine to create goods and services. The four factors are land (rent), labour (wages), capital (interest) and organisation or enterprise (profit).

Meaning

The factors of production are the basic resources or inputs that are used together to produce goods and services. Production is not possible without combining these factors. There are four factors of production.

The four factors

• Land: All the free gifts of nature used in production — soil, minerals, water, forests and climate. Its reward is rent. Land is a passive factor, fixed in supply, and its quality differs from place to place.
• Labour: Any mental or physical human effort undertaken for a reward, with the object of producing goods and services. Its reward is wages. Labour is an active, human and perishable factor.
• Capital: All man-made goods used for further production, such as machines, tools, buildings and raw materials. Its reward is interest. Capital is a produced means of production and can be increased. …