Answer to Question #157435 in Economics for Jonathan

Question

Writing About Economics Develop- an outline about the factors that influence production. Your outline should include all four factors: land, labor, capital, and entrepreneurship. Then use your outline to write a summary of the economic resources needed to produce goods and services.

Answer 1

Factors of production - the resources used in production, on which the quantity and volume of output depend to a decisive extent. The demand for factors of production is derivative; it exists only insofar as they participate in the production process.

 There are four main factors of production: labor, land, capital, and entrepreneurship. The first factor - labor - is a process of conscious purposeful activity of people, aimed at creating the benefits they need. The labor process is associated with the expenditure of human energy, muscles, intelligence. Such costs are considered by economic theory as an expenditure of human labor. The labor force is understood as a person's ability to work - physical and professional ability. Labor power, therefore, exists before the labor process begins, which appears as a function of labor power. Since the labor force acts as labor in potential, it is considered as a labor resource. On a society-wide scale, labor resources are represented by that part of the country's population that is capable of work, that is, has a labor force. Labor as a factor of production has quantitative and qualitative characteristics. Quantitative characteristics reflect labor costs, determined by the number of workers, their working time, and labor intensity, that is, the intensity of labor per unit of time. Qualitative characteristics of labor reflect the skill level of workers. At this level, there is a general division of workers into skilled, semi-skilled, and unskilled. The ratio of the result of labor in the form of the number of products produced to its costs per unit of time characterizes labor productivity. The increase in productivity allows for a given labor input per unit of time to produce more products. Labor productivity depends on a number of factors that can be divided into subjective and objective.

 

Income from the use of labor is called wages. The wage rate in modern economic science is understood as the price paid by the employer to the employee for the right to use his labor for a certain period of time. Depending on the method of assessing labor costs, time-based (hourly, daily, weekly, monthly), piecework, lump-sum, and other types of remuneration are used. Distinguish between nominal and real wages. The nominal wage is called the amount of money received by the employee, real - the totality of goods and services that can be purchased with this money, taking into account the purchasing power. In conditions of perfect competition, the price of labor is formed like the price of any other commodity. This means that all employees receive an equal salary, which does not depend on which firm they work in, and is perceived by the firm as an outwardly given value. Therefore, for an individual firm, the labor supply is absolutely elastic. In conditions where the level of wages is not related to the behavior of the firm, only the number of hired workers depends on the entrepreneur. The second factor, called land, is the natural goods that support the production process. This factor includes the following elements of nature: agricultural land; forests; waters of oceans and seas, lakes, rivers, as well as groundwater; chemical elements of the earth's crust, called minerals; the atmosphere, atmospheric and natural-climatic phenomena, and processes; space phenomena and processes; the space of the Earth as a location for the material elements of the economy, as well as near-Earth space. However, the intensive use of land as a factor of production involves the involvement of additional social factors - labor and capital - into production. Thus, the artificial increase in the fertility of the land requires the introduction of mineral fertilizers into the soil, that is, the application of additional capital to the land. Essentially, one factor of production is being replaced by another.

This means that overcoming the limitations of natural factors of production requires that the involvement of substituting factors of production be unlimited, which, of course, is impossible. So the problem of limited natural resources is not removed with the development of the economy. Scientific and technological progress makes the limitedness of the land as a factor of production relative. It pushes the boundaries of depletion of natural resources but does not exclude the very possibility of depletion due to the presence of the physical boundaries of the planet Earth. The payment for land is called rent. Rent as an economic category represents income from natural resources. Although this term is often used to refer to income from any property, and not only in the form of natural resources. In the economy, the most important are land and mining rent, that is, income from the lease of land and mining lands and mineral deposits.