Land is considered a primary factor of production because it can help generate economic value. Land as a factor of productionĪs a factor of production, land can take on various forms-from raw property to commercial real estate. These are the four factors or production: 1.
Some economists have identified capital finance, or monetary capital, as the fifth factor of production, but it is not wholly accurate to understand capital finance as a primary factor. Economists have established land, labor, capital and entrepreneurship as the four primary factors of production. There are two main types of factors of production: primary and secondary factors. Related: Production Process: Definition and Types for Businesses To Use 4 factors of production It's important to note that factors of production aren't the same as raw materials-rather, factors of production are used in production but don't usually become part of the product and aren't transformed by the production process.
Factors of production are often described as the inputs needed for supply within a market economy, or any resource needed to create a finished product. They're used in various ways to create products and generate economic profit. Factors of production, or producer goods, are inputs needed to produce a consumer good or service.
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