FACTORS OF PRODUCTION.

Hey Guyz, Happy Wednesday to you. Congratulations for being selected to be in the Land of the Living today. Hope this day brings you Joy unspeakable in all areas of your life. We are continuing from where we stopped in Econs. 101 with the above topic, so let’s get started.

Factors of Production refer to Agents, Components or resources which are combined together to produce goods and services. There are four factors of production namely:

a. Land

b. Labour

c. Capital

d. Entrepreneur

LAND.

Land is defined in economics as a free gift of nature, it does not only include the land surface but all other free gifts of nature and natural resources like forest, mineral resources, rivers etc. The supply of land is unlimited unlike other factors of production. The reward for land is RENT.

Characteristics of Land {Its Features}:

1. Land is immobile, it can’t move from one place to another.

2. The Supply of land is fixed, it is impossible for man to increase the quantity of land.

3. Land is a free gift of Nature.

4. Land is subject to diminishing returns, this happens when a land is frequently bought under cultivation, and it reduces its productivity.

5. The quality and quantity of land varies from one place to another as well as its fertility.

6. Land has no cost of production.

7. The reward for Land is Rent.

Importance of Land:

1. It is useful for Farming Purposes.

2. Land is useful for livestock purposes.

3. It is useful for Fishery purposes.

4. It can be used as collateral security when one wants to collect loan from a bank. The Certificate of Occupancy ( C of O) is usually requested by the bank as collateral.

5. It is useful for wildlife purposes.

6. It is used for transportation purposes.

7. It is used for residential purposes.

LAW OF DIMINISHING RETURNS.

This law states that as successive units of a variable factor (Labour, Capital etc) is applied to a given fixed factor (Land), output will increase at first but it will get to a point at which the addition of one more unit of the variable factor will result in less additional units of output. This Law can sometimes be called The Law of Variable Proportions. This is applicable to agriculture and industry because they both used fixed and variable factors of production.

Importance of Law of Diminishing Returns:

1. It ensures efficiency.

2. It enables change in scale of production.

3. It aids proper combination of the factors of production.

This concludes our session for today, Hope you found this helpful and insightful? Until we meet again, remain ever blessed and remember you are for SIGNS & WONDERS. God Bless You.