Factors of Production

In a business, it is important to consider the factors of production, or commodities used to produce goods.
The 'four factors of production' in a business are:

1. Land
2. Labour
3. Capital
4. Entrepeneur.

1. Land
: is the natural resources and therefore includes not only the land that we stand on, grow crops on and build upon but also fisheries, mines and forests. The Payment given to the owners of land is rent.

2. Labour
: is defined as all the physical and mental effort devoted into the production process. The payment for labour is called salary/wages

3. Capital
: is the manufactured resource that is used in the production process. These are things like machinery, things that can help the business produce things. Payment to capital is interest.

4. Enterprise
: Is the unique ability someone in the business has to organise the factors of production and implement changes in a business to allow the business to be profitable.