Meaning and Definition: The term land in economics is used in a special sense. Money is not capital as economists define capital because it is not a productive resource. > You will notice that I did not include money as a factor of production. Technology and the Factors of Production. In economics, “factors of production” are the inputs used to create finished goods (i.e., the actual products we buy). Each factor of production has a unique type of payment associated with it, called factor payments. Labor. Some of these inputs in a normal situation are “free.” In economic terms, money is not a factor of production because it is a resource used to acquire resources that go into producing goods. Summary The factor payment for labor is referred to as “wages.” Land. Entrepreneur A person who, operating within the context of a market economy, seeks to earn profits by finding new ways to organize factors of production. Land in economics means natural resources. The factors of production can be used as … Simply stated, factors of production are the “ inputs” necessary to obtain an “ output.” However, not all the “inputs” that must be applied are to be regarded as factors in the economic sense. These are workers. Technology is not considered an official factor of production on our list, but it is significant within the realm of production. Hence, it can increase production efficiency and act as a factor of production. Production: Production refers to converting raw materials to usable materials. The factors of production include land, labor, capital and entrepreneurship. This implies that the factors of production should be used in combination, so that the production target can be achieved. A factor of production that have been produced for use in the production of other goods and services. Even though entrepreneurship is not part of the classical factors of production, it is often added to the list as a fourth factor. It, however, is not only limited to creating things, but it also involves doing everything possible to ensure that the goods produced can satisfy human wants. The following is an adapted excerpt from my book Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less. By technology, we mean hardware and/or software that works to improve and increase the efficiency of production. You might ask, isn't money a type of capital? The factors of production are capital, labor, and land. A company's production can be represented graphically as a production curve. L and as a Factor of Production:. This includes land that is rented or purchased, as well as other components like natural resources and raw materials. It d oes not mean soil or earth surface alone. The reasoning behind this is that entrepreneurship often leads to innovation, new processes, or new products. This, therefore, means that production starts right from the ground. d) A bank loan. 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