Question

Which is the most abundant factor of production?

Answer 1

The most abundant factor of production is the Land. The first requirement island, and other natural resources such as minerals, forests, and water.

Factors of Production

Every production is organised by combining human capital, labour, land, and physical capital which are known as factors of production.

Aims of Production

The aim of production is to produce the service and goods that we want.

4 Requirements or Factors of Production

• As mentioned above, land is the primary requirement.
• The second requirement is labour. Here labour could be workers who do manual work, which does not require a high degree of skills and some production activities require workers who are highly skilled and educated.
• Physical capital is the third requirement or factor needed for production.
• The fourth requirement is the Human Capital. To produce an output and sell it in the market, one needs enterprise and knowledge. Enterprise and knowledge is also needed to put together, physical capital, land, and labour which will help in production. Hence, this is known as Human Capital.

Physical Capital

A variety of equipment or inputs are needed at every stage of production. This is known as physical capital. Physical Capital can be divided into 2 types:

1. Working Capital
2. Fixed Capital

Working Capital

• Money and Raw materials in hand are known as working capital.
• Money is always needed to purchase raw materials, necessary items needed for production, and make payments.
• Various types of raw materials are needed for different types of products, for example, a potter needs clay and a weaver needs yarn.

Fixed Capital

• Machines, buildings, and tools can be used in production over many years.
• Tools could vary from a simple machine like tractors or ploughs to highly sophisticated machines such as computers, generators, turbines etc.

Land

• Without land, no production can take place. Land is needed for farming, land is needed for manufacturing of simple or complex products. Land is also needed for providing any kind of service.
• Hectare is the standard unit of measuring land.
• One hectare equals the area of a square with one side measuring 100 metres.
• Bigha, Guintha are the local units one may come across for measuring land in villages.

Human Capital

• Population becomes human capital when there is an investment made in the form of education, training and medical care.
• Investment in education is considered one of the main sources of human capital.
• There are several other sources as well. Investments in health, on- the job training, migration and information are the other sources of human capital formation.
• The importance of Human Capital in India can be seen in the form of the IT revolution in India, Green Revolution, progresses made in the Healthcare field, space technology, defence technology etc.
• Land and capital cannot become useful on their own, but human resources can make use of capital and land. Hence, in a way, one can say human capital is superior to other resources.

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Refer more

• What is production activity? What are the inputs required to do this activity?
• What is the Law of production function?