The ultimate aim of all factors of production is consumption. In a simple economy the producer consumes his own product (a hunter catching a fish). In advanced communities most products are produced for exchange of other products through money.
Direct Production
The creation of utilities for immediate final consumption.
Indirect Production
The creation of wealth for use in further production as manufacÂture of steel for making machine tools, and machinery to make cloths.
Four Factors of Production
There are four factors of production.
1. Land. Land as factors of production includes not only area of the earth surface but all resources that are a gift of nature as mineral deposits. Read More
2. Labor. The second factors of production labor is any human effort used productively (with an output of goods or services) for which payment is made. Honorary work and work for enjoyment are excluded Read More
3. Capital. Capital factors of production includes all material resources (excluding land) or stock of wealth used productively. The meaning of Capital in economics is more precise and restricted than its meaning to a businessman or an accountant. A stock of money, shares in a company or a private hoard of consumer goods is not capital. Read More
4. Entrepreneur. Entrepreneur the fourth in factors of production, is the owner of any business company or enterprise who is mainly work to earn money by taking initiative and risk. Entrepreneur is basically taken from French and first time used by Richard Cantillon. The term Entrepreneur as factors of production used for a person who willingly launch an enterprise and take the whole responsibility for the consequences and result from the business in the future. is the owner of any business company or enterprise who is mainly work to earn money by taking initiative and risk. Entrepreneur is basically taken from French and first time used by Richard Cantillon. The term Entrepreneur used for a person who willingly launch an enterprise and take the whole responsibility for the consequences and result from the business in the future.Read More