Term Paper on
Microeconomics
Course- EMBA 505

Submitted to:
Mahbub Alam
Lecturer
Department of Management Studies
Comilla University

Submitted by:
Md. Masudur Rahman Id: - 120205018

What are the different types of factors of production?
Factors of production mean inputs and finished goods mean output. Input decides the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called as "Production Function".
All factors of production like land, labor, capital and entrepreneur are required altogether at a time to produce a commodity. In economics, production means creation or an addition of utility. Factors of production can be classified into four categories. Such as: 1. Land 2. Labour 3. Capital 4. Enterprise

Factors of production refer to inputs required for conducting production. Input is the starting point of every production activity.
According to Prof. Benham, "Anything that contributes towards output is a factor of production."
Mere existence of anything doesn't make it a factor of production but its contribution in production process is a necessary condition. Dr. Alfred Marshall described factors of production as "Agents of Production". Cooperation among factors is essential to produce anything because production is not a job of single factor

Four Factors of Production in Economics - Chart

Following chart provides brief tabulated information on 4 factors of production.

* Mention the features of Land, Labor. * Land:-

Land is a Natural and primary factor of Production.
Land is not created by mankind but it is a gift of nature. So, it is called as natural factor of production. It is also called as original or primary factor of production. Normally, land means surface of earth. But in economics, land has a wider meaning, take a good look at the following picture:

From the above picture it is clear that land includes earth’s surface and resources above and below the surface of the earth. It includes following natural resources:- a. On the surface (e.g. soil, agricultural land, etc) b. Below the surface (e.g. mineral resources, rocks, ground water, etc.) c. Above the surface (e.g. climate, rain, space monitoring, etc.)

Features of Land:- 1. Land is a free gift of nature:- Land is a free gift of nature to mankind. It is not a man-made factor but is a natural factor. 2. Land is a primary factor of production:- Though all factors are required for production, land puts foundation for production process. Starting point of production process is an acquisition of land. So, it is primary factor. 3. Land has perfectly inelastic supply:-
From society’s point of view, supply of land is perfectly inelastic i.e. fixed in quality. Neither it can be increased nor decreased. Simply, you can not change size of the earth. But from individual point of view, its supply is relatively elastic. 4. Land has grad ability :-
Land varies from region to region on the basis of fertility. Some lands are more fertile and some are not at all. So, fertility wise, grading of land is possible. So, in this way, land has grad ability. 5. Land is a passive factor:- Land itself doesn’t produce anything alone. It is a passive factor. It needs help of labour, capital, entrepreneur, etc. like labour and entrepreneur, it doesn’t work on its own initiative. So it is a passive factor. 6. Land may have diminishing returns:- Here, return means quantity of crops. By using fertility of land with the help of capital and labour continuously, returns get diminished because of reduction in fertility. 7. Land has a derived demand:-
Demand for agricultural goods is a direct demand and producing such goods, land is indirectly demanded. So, as a factor, land has a derived demand from consumer’s point of view. 8. Land has no social cost:- Land is a gift of nature to society. It is already in existence. Land is no created by society by putting any efforts and paying any price. So, for society, supply price of land is zero.
09. Land is an indestructible factor:- Land is durable and not perishable. It has a long life. No one can destroy the land. The power of land is permanent and indestructible. Its fertility can be destroyed as well restored by human efforts. 10. Land is perfectly immobile:-
Mobility means ability to move. Movement of land from one place to another is impossible. Thus physically, land is perfectly immobile. But it has certain occupational mobility because it can be used for variety of occupation, like agricultural use or for construction of houses. 11. Land has a site or location value:-
Every piece of land has its certain site or location value. Such value depends upon quality of its location. Land near to sources of raw materials and other infrastructure facilities always enjoy high site value. Here accessibility of land plays an important role. 12. Land earns rent as a reward for its use:
Rent is a reward for the use of land. Classical economists like Ricardo connected rent with fertility of land whereas modern economists like Marshall and Javons stated that land earns rent because of its scarcity.

Features of Labour:-
Usually, the term 'Labour' is used for 'worker'. But, technically, it is not correct. Labour and Labourer (worker) are two different things.

Labour is an ability to work. Labour is a broad concept because it includes both physical and mental labour (as per above picture). Labour is a primary or human factor of production. It indicates human resource.
Labourer is a person who owns labour. So labourer means worker. It is a person engaged in some work.

1. Labour is inseparable from labourer

Labour can not be separated from labourer. Worker sells their service and doesn't sell themselves.

2. Labour is a perishable factor

Labour can not be stored. Once the labour is lost, it can not be made up. Unemployed workers can not store their labour for future employment.

3. Cost of producing a labour cannot be determined

It is easy to calculate production cost of a commodity produced in an industry. But cost of producing a labour is a vague concept because it includes expenses incurred by parents on education of their children and other expenses incurred on them right from their birth date. It is impossible to estimate all such casts accurately.

4. Labour is an active factor of production

Other factors like land, capital are passive, but labour is an active factor of production. Being a human being, this factor has its own feelings, likes and dislikes, thinking power, etc. We can achieve better quality and level of production, if land and capital are employed properly in close association with Labour. So without labour, we cannot imagine the smooth conduct of production.

5. Labour is a heterogeneous factor

No two persons possess the same quality of labour. Skills and efficiency differs from person to person. So, some workers are more efficient than others in the same job.

6. Labour has imperfect mobility

Labour doesn't move easily from one occupation to another because of several factors like family and cultural background, limited educational and technical skills, lifestyle, housing and transport problems, language barrier, adaptability to new environments, etc.

7. Labour supply is inelastic in general

Supply of labour depends upon many factors like size of population, age and sex composition, desire to work, quality of education, attitude towards work, etc. Thus, supply cannot be changed easily according to changes in demand.
Hence, in general, labour supply is inelastic. But for a particular industry, it may be relatively elastic.

8. Labour is a human capital

Society makes investment in labour in the forms of education, health, training, etc. This improves efficiency of labour. So, it is a human capital.

9. Trade unionism is a factor of Labour

Workers collectively form their organization which is known as trade union. With this, they bargain with their employers and there by secure higher wages and better working conditions. Such trade unionism is not possible in other factors of production like land, else works only in case of labour (labourer).

10. Labour has a derived demand

Like other factors of production, labour has a derived / indirect demand. It contributes to production process.

11. Labour is a Mean as well as an End

Labour is a mean of production in factory. But outside the factory premises worker may be a consumer of that product. So, he might be an end user of that commodity.