What Are The Factors Interdependent? Explain Essay

1126 Words Dec 18th, 2015 null Page
Factors of Production

Briefly define each factor of production.

Land: Land includes everything that is not human created and can be used to produce. For example: sunlight, air, water, wind, and soil. Land includes all the raw materials. Land is very important for human survival.
Labour: Labour exists in order to use land. In order to utilize the land, people must alter the land resources and produce something base on it. People are labour resources. Labour will convert raw materials to useable materials or products that will satisfy wants and needs.
Capital: Capital represents wealth that are used for production. When the produced land materials and products are exchanged, we refer the exchange value as wealth. Capital is used to produce more wealth by using wealth. Examples of that are factories, machineries and equipments. Money or stocks, however, do not count as a capital resource.

2. Why are the factors interdependent? Explain.
Consider the example of building a house. The raw materials needed, such as a piece of land and woods, can be considered as land, which is all the necessities or basis in the production of houses. The equipment used, such as an excavator, can be considered as capital, which is the tool that we need to build a house. And finally, workers and managers can be considered as labour, which is the human resources needed. Labour transforms raw materials into a house by using tools. These three factors altogether form an efficient chain of production,…

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