Name: Abbas Faheem

Reg. No.: UW-19-CHM-BS-102

Department: Chemistry
Semester: 3rd “C”

Economics:
Definition
A branch of social science that deals with qualitative and quantitative analysis of monetary
distribution of resources throughout a society; ranging from a small household to a huge industry, from
national to international level; with the help of graphs and charts is called economics.
Production:
Production refers to the conversion of raw materials or any other kind of input into a
sophisticated output. In every economy production is a major factor which paves way to the demand and
supply of different goods and services, i.e., if nothing is being produced how can it be demanded or even
if it is demanded how can it be supplied? So, the whole market system is related to the production of
goods and services. In order to produce something, there are some important factors that must be
understood and used according to requirement. These are known as “Factors of production”.
Factors of Production:
The different kind of elements that make production of goods possible are known as factors of
production. There are four major factors of production which are as follows:
1) Land
2) Labor
3) Capital
4) Entrepreneurship
Let us discuss them separately to emphasize their significance.
1) Land
All those non man-made natural resources which act as raw materials for production of a certain
good are included in land. These include fuel such as oil, coal, gas etc., agricultural land (for cattle, fruits
and vegetables), commercial real estate (land to build factories on), rivers, oceans, forests, mines and
mountains. These are primary resources that are utilized as input to give us some certain output. These
resources can be renewable, such as forests, or nonrenewable such as oil or natural gas. The income
earned from land or other such natural resources is called rent. Land was designated as the origin of
economic value by the physiocrats, a collection of French economists who came before the better-known
classical political economists (Smith, Ricardo, Marx, and others).
Example:
A farmer utilizes fertile agricultural land to grow wheat which is then converted into flour by
some industry. The land here is the primary factor which initiates the production process.
2) Labor
All human effort that assists in production is called labor. These include blue collar labor (manual
labor) as well as white collar labor (office and management work). Even though raw materials are gifted
to us by nature, some human effort is necessary to collect them and turn them into products. This human
effort is known as labor. The quality of labor depends on the workforce’s skills, education, and
motivation. Generally speaking, the higher the quality of labor, the more productive is the workforce. The
payment of labor is known as wage. Labor was considered to be the main source of economic value
according to early, influential political economists.
Example:
Examples of labor range from the very physical to primarily mental work that goes into
production. On the mental side of this factor of production are laborers like artists producing art, or
programmers creating software. On the more physical side of labor might be food service workers,
construction workers, or factory workers.

3) Capital
The man-made goods which help in the production process are called capital. It includes
factories, machinery, tools, equipment, wealth etc. Modern, mainstream/neoclassical economists typically
consider capital to be the main source of value, in contrast to economists of the past, who described land
or labor as such. The income earned by owners of capital resources is called interest. We should
understand that personal and private capital is distinct from the capital being described here. For instance,
a personal vehicle is not a capital good in this sense; however, a taxi or other vehicle used in some form
of business is considered to be a capital good. An increase in capital goods means an increase in the
productive capacity of the economy.
Example:
Some examples of capital include hammers, forklifts, conveyor belts, computers, and delivery
vans. Office furniture like conference tables and desk chairs also fall under the umbrella of capital.

4) Entrepreneurship
An entrepreneur is a person, a business or a company who takes on the economic risk involved in
bringing the other three factors of production together in order to produce some kind of output. He is the
one who decides “What to produce?”, “How to produce?” and “When to produce?”. The payment an
entrepreneur receives is referred to as profit, and functions as a reward for the risk they take.
Entrepreneurs are a vital engine of economic growth at all scales, helping to build many of the largest
firms in the world. They utilize their imagination, administrative accountability, creativity, initiative,
problem solving and organizational skills, communication and knowledge to start a small business which
then turns into a national and then international standard company. They also help the economy by
providing jobs and increasing the exports of a country.
Example:
Examples of well-known entrepreneurs include Bill Gates (Microsoft), Steve Jobs (Apple) and
Mark Zuckerberg (Facebook).

Why did I choose Production?

Economics as far as I understand is a social science which deals with the distribution of resources
throughout a society. A society may refer to a small firm (Microeconomics) or a huge country
(Macroeconomics). Production serves as a driving force for any economy. Since the backbone of
production is its factors therefore, they also have theoretical as well as practical significance. We have
been given a lot of natural resources by God but in order to make them usable, we have to convert them
into some sophisticated form which can then be utilized. The land is of no use if not used for producing
something, our human strength and intelligence are of no use if not utilized in production of resources
that can make our life better. Production is a primary process that initiates the economy as a whole. All
other factors that we study in economy such as demand and supply, profit, cost etc. have no value if there
is no production process. So, due to the significance and apprehension of this topic I thought it would be
best to try and elaborate its importance in my own words.