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Land: Land was considered to be the “original and inexhaustible gift of nature.” In modern
economics, it is broadly defined to include all that nature provides, including minerals, forest
products, and water and land resources. While many of these are renewable resources, no one
considers them “inexhaustible.” The payment to land is called rent.

Discuss the characteristics of Land

1.Land is a free gift of nature: Man has to spend nothing to obtain it.:

2.Land is limited in supply: Amount of land on earth does not increase or decrease.

3.Land is a primary factor of production: In every kind of production we

have to make use of land.

4.Land is a passive factor of production: It cannot produce anything by itself;

it requires services of labour and capital.

5.Land is permanent: Land is not perishable but it is indestructible and thus it

cannot go out of existence.

6.Land is immovable: It cannot be transported from one place to another.

7.Land varies in fertility: Fertility of land differs on different pieces of land.

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Labour is the amount of physical, mental, and social effort used to produce goods and
services in an economy. It supplies the expertise, manpower, and service needed to turn raw
materials into finished products and services. In return, laborers receive a wage to buy the
goods and services they don't produce themselves. Those without desired skills or abilities
often don't even get paid a living wage. Many countries have a minimum wage to make sure
their workers earn enough to cover the costs of living.

Discuss the characteristics of Labour:

1.Labour is perishable: If a worker does not work on a particular day, his labour for that day
is wasted.

2.Labour is an active factor of production: without labour other factors of production,

.i.e. land and capital cannot produce anything.

3.Labour cannot be separated from labourer: labour and labourer are inseparable from
each other. The labourer will have to present himself at a place where work is going
on.

4.Labour sells his labour but not himself: A labourer may or may not agree to do work.

5.Labour is mobile: It can move from one place to another and also from one occupation
to another.

6.Labour differs in efficiency:Some labourers are less efficient and some are
more due their ability, training and skill.

7.Supply of labour is inelastic in short run: it means that the supply can neither be
increased nor decreased in the short run.

8.Labour is both, a means and an end: they produce goods as well as consumes them.

9.Demand for labourer is derived: labourers are demanded only when there is demand for the
goods and services produces by them.

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Capital is an important factor of production. It consists of those goods which are produced
by the economic system and are used as inputs in the production of further goods and
services. Capital may be physical or tangible or intangible. Capital goods yield valuable
production services over time.

Discuss the

1.Capital is manmade: Capital is the result of savings which are made by man.Characteristics
of Capital:

2.Capital is a passive factor of production: It cannot produce anything by itself. It becomes

effective only when it is used by the labour.

3.Capital is mobile: it is easily transferable from one place to another and also from
one occupation to another.

4.Supply of capital is elastic: It can be easily increased or decreased as it is a man made

factor.

5.Capital is productive: Total output with the use of capital will be higher than it would have
been without it.

6.Capital involves cost: Capital formation would become possible only when present
consumption is sacrificed. This sacrifice is called cost.

7.Capital is subject to depreciation: The plant and machinery, while in use, wear out
and have to be replaced after some time.8.Capital is the result of past savings: Capital
goods can be produced and increased in stock only after saving money and reinvesting it

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What Is an Entrepreneur?

An entrepreneur is an individual who creates a new business, bearing most of the risks and
enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source
of new ideas, goods, services, and business/or procedures.

Entrepreneurs play a key role in any economy, using the skills and initiative necessary to
anticipate needs and bring good new ideas to market. Entrepreneurs who prove to be
successful in taking on the risks of a startup are rewarded with profits, fame, and continued
growth opportunities. Those who fail, suffer losses and become less prevalent in the markets.

Discuss the Function of Entrepreneur

1.Risk bearing: Risk bearing function is an important function as it a requirement for the
business to grow.:

2.Decision making/taking:It is an important function as the entrepreneur has to

take many important decisions in relation to his business.

3.Coordination and supervision:An entrepreneur not only brings different factors

of production together, but also organises them.

4.Distributiv functions :The entrepreneur has to decide the reward that each factor of
production should get. In deciding this, he has to bear in mind their relative
contribution to production.

5.Innovative functions: The entrepreneur has to choose profitable innovations and

apply them to earn more and more profits.

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