Scribd
Upload
107 views12 pages

Factors of Production PPT 2

The document discusses the four factors of production: land, labor, physical capital, and human capital. It defines each factor and provides examples. Physical capital is further divided into fixed capital like machines and buildings, and working capital like raw materials and money. The document argues that human capital is the most important factor as it can control the other factors of production.

Uploaded by

messi.singharyan123
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
107 views12 pages

Factors of Production PPT 2

The document discusses the four factors of production: land, labor, physical capital, and human capital. It defines each factor and provides examples. Physical capital is further divided into fixed capital like machines and buildings, and working capital like raw materials and money. The document argues that human capital is the most important factor as it can control the other factors of production.

Uploaded by

messi.singharyan123
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 12

1) Organisation of Production

What is Production?
• Production: Creation of goods or performance
of services for commercial purposes or for
self-consumption.
• Goods & services used in the process of
production are called inputs.
• Goods and services which come out of the
process of production as a finished product
are called outputs.
FOUR FACTORS OF PRODUCTION
The first
requirement is
land, and
other natural
resources such
as
 water,
 forests,
 minerals.
2.LABOUR
 The second requirement is
labour, i.e. people who will do
the work.

 Some production  Other


activities require activities
highly educated require
workers to workers
perform the who can
necessary tasks. do manual
work.
 Each worker is providing the labour necessary
for production.
DID YOU KNOW?
3.PHYSICAL CAPITAL
The third requirement is physical capital, i.e. the variety
of inputs required at every stage during production.

The items that come under physical capital

FIXED CAPITAL WORKING CAPITAL.


Fixed Capital
a) Tools, machines,
buildings:
Tools and machines range
from very simple tools such
 as a farmer’s plough to
 sophisticated machines
such as generators,
turbines, computers, etc.
Tools, machines, buildings
can be used in production
over many years, and are
called fixed capital.
Working Capital
b) Raw materials and money in
hand:
 Production requires a variety
of raw materials such as
 the yarn used by the weaver
 the clay used by the potter.
 Money is always required
during production to make
payments and buy other
necessary items.
 Raw materials and money in
hand are called working
capital.
DIFFERENCE BETWEEN FIXED &
WORKING CAPITAL
FIXED CAPITAL WORKING CAPITAL

Refers to those inputs which Those inputs which are used up


are not used up completely in completely during the
the production process. production process

Can be used again and again Cannot be used again and again

Examples: machines, buildings, Examples: raw materials,


infrastructure, etc money, etc
4.HUMAN CAPITAL

There is a fourth requirement


too.
You will need
 knowledge and enterprise to
be able to put together
• land,
• labour and
• physical capital and
produce an output either to use
yourself or to sell in the market.
This is called Human Capital.
Which is the most important factor of
production and why?
• Human capital is the most important factor of
production because it can control the other
factors of production.

You might also like