Factors Of Production

Loading the player...

DEFINITION of 'Factors Of Production'

An economic term to describe the inputs that are used in the production of goods or services in the attempt to make an economic profit. The factors of production include land, labor, capital and entrepreneurship.

BREAKING DOWN 'Factors Of Production'

In essence, land, labor, capital and entrepreneurship encompass all of the inputs needed to produce a good or service. Land represents all natural resources, such as timber and gold, used in the production of a good. Labor is all of the work that laborers and workers perform at all levels of an organization, except for the entrepreneur. The entrepreneur is the individual who takes an idea and attempts to make an economic profit from it by combining all other factors of production. The entrepreneur also takes on all of the risks and rewards of the business. The capital is all of the tools and machinery used to produce a good or service.

RELATED TERMS
  1. Mass Production

    The manufacturing of large quantities of standardized products, ...
  2. Marxism

    A social, political and economic philosophy that examines the ...
  3. Cost Of Labor

    The sum of all wages paid to employees, as well as the cost of ...
  4. Production Externality

    Costs of production that must ultimately be paid by someone other ...
  5. Economic Value Added - EVA

    A measure of a company's financial performance based on the residual ...
  6. Classical Economics

    Classical economics refers to work done by a group of economists ...
Related Articles
  1. Economics

    Factors Of Production

    Factors of production is an economic term describing the general inputs used to produce goods and services to make a profit. Under the classical view of economics, the factors of production consist ...
  2. Economics

    Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
  3. Economics

    The Economics Of Labor Mobility

    Loosening labor restrictions has both good and bad effects for a country and its workers.
  4. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  5. Retirement

    Economic Indicators To Know

    The economy has a large impact on the market. Learn how to interpret the most important reports.
  6. Investing Basics

    How To Invest In Private Companies

    Owning a private firm means sharing more directly in the underlying firm’s profits.
  7. Entrepreneurship

    How to Run a One-Person Business

    Learn how to get a successful one-person business up and running with a business plan, financing, time-management tricks and delegation of tasks.
  8. Entrepreneurship

    Top Legal Tips for Starting a Business

    Before you launch a new business, make sure you're on top of the key issues that most startups face.
  9. Investing News

    The 10 Fastest Growing Green Startups in 2016

    These social entrepreneurs adopt triple bottom lines that champion urgent environmental problems while generating returns for shareholders.
  10. Retirement

    Roth IRAs Tutorial

    This comprehensive guide goes through what a Roth IRA is and how to set one up, contribute to it and withdraw from it.
RELATED FAQS
  1. What's the difference between economic value added (EVA) and economic rent?

    Economic value added (EVA) measures the performance of a company's management team by comparing operating profit to total ... Read Full Answer >>
  2. What are the most important aspects of a capitalist system?

    The most important aspects of a capitalist system are private property, private control of the factors of production, accumulation ... Read Full Answer >>
  3. What is human capital and how is it used?

    Human capital is a loose term that refers to knowledge, experience and skills of an employee. The theory of human capital ... Read Full Answer >>
  4. What inputs are considered to be factors of production?

    Factors of production are inputs used to produce an output, or goods and services. They are resources that a company requires ... Read Full Answer >>
  5. What are the main differences between a market economy and a socialist economy?

    Market economies and socialist economies differ by their logical underpinnings, stated or implied objectives, and structures ... Read Full Answer >>
  6. How do different economic schools of thought treat the factors of production?

    Most economic schools identify the same types of factors of production: land, labor, capital and entrepreneurship (intellectual ... Read Full Answer >>
  7. How are labor demand forecasts made in human resources planning?

    Human resources planning can use qualitative and quantitative approaches to forecasting labor demand. Quantitative methods ... Read Full Answer >>
Hot Definitions
  1. Short Selling

    Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is ...
  2. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  3. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  4. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  5. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  6. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center