four factors of production and their payments

Physiocracy (from the Greek for 'government of nature') is an economic theory developed by a group of 18th century Enlightenment French economists who believed that the wealth of nations was derived solely from the value of 'land agriculture' or 'land development' and that agricultural products should be highly priced.Īn advertisement for labor from Sabah and Sarawak seen in Jalan Petaling, Kuala Lumpur ĭifferences are most stark when it comes to deciding which factor is the most important. In the interpretation of the currently dominant view of classical economic theory developed by neoclassical economists, the term 'factors' did not exist until after the classical period and is not to be found in any of the literature of that time. The number and definition of factors vary, depending on theoretical purpose, empirical emphasis, or school of economics. Sometimes the overall state of technology is described as a factor of production. Entrepreneurship is also sometimes considered a factor of production. Recent usage has distinguished human capital (the stock of knowledge in the labor force) from labour. Land includes not only the site of production but also natural resources above or below the soil. The primary factors facilitate production but neither becomes part of the product (as with raw materials) nor becomes significantly transformed by the production process (as with fuel used to power machinery). Materials and energy are considered secondary factors in classical economics because they are obtained from land, labour, and capital. The previously mentioned primary factors are land, labour and capital.

There are two types of factors: primary and secondary.

The factors are also frequently labeled 'producer goods or services' to distinguish them from the goods or services purchased by consumers, which are frequently labeled 'consumer goods'. There are four basic resources or factors of production: land, labour, capital and entrepreneur (or enterprise). The utilized amounts of the various inputs determine the quantity of output according to the relationship called the production function. In economics, factors of production, resources, or inputs are what is used in the production process to produce output-that is, goods and services.

Four factors of production and their payments