Factors Of Production


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.


Loading the player...

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.

  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. Economics

    A social science that studies how individuals, governments, firms ...
  6. Economic Profit (Or Loss)

    The difference between the revenue received from the sale of ...
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

    How Aliko Dangote Became the Richest African

    An overview of how Aliko Dangote turned a local commodities trading business into a billion-dollar conglomerate.
  7. Investing News

    Austin Set to Rival Silicon Valley

    Over the years, Austin, Texas has lovingly embraced its quirky reputation with the slogan “Keep Austin Weird.” Today, the capital city is attracting several tech startups and investors, making ...
  8. Entrepreneurship

    Top 3 Most Successful Korean Entrepreneurs

    Discover the backgrounds of some of the most successful Korean entrepreneurs and information about the companies and projects leading to their success.
  9. Entrepreneurship

    Top 5 Most Successful Swedish Entrepreneurs

    Understand what makes Sweden a great place for entrepreneurship. Learn about five successful Swedish entrepreneurs who are making big impacts.
  10. Entrepreneurship

    Top 3 Most Successful African Entrepreneurs

    Discover the educational backgrounds and entrepreneurial ventures of some of the most successful and well-known African entrepreneurs.
  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 >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!