This factor organizes land, capital and labor to produce goods and services to earn profit. Entrepreneurial activities are engine of the production environment. They utilize all these factors of production for profit motive. It depreciates to become useless EntrepreneurshipĮntrepreneurs are those individual who combine all other factor of production i.e. Inflation is the depreciation in money, low efficiency is depreciation in machinery and weakness, pain is depreciation in labor. All the capital resources have an efficiency parameter, the more we use the more it wears. The value of capital depreciates with time. Capital is a human-made resource and is a mobile factor of production, supply is very elastic. One can increase or decrease the demand and supply of capital when needed. It has a quality, divisibility and portability. Capital can be transferred from one site to another, one country to another. It can be moved from one place to another place as per the need by entrepreneur or labor. Business cannot operate only with capital and requires labor for execution.Ĭapital has a high mobility among factors of production. It requires land and labor to produce something. All the investment made in the business, machinery, and tools is human-made.Ĭapital cannot act alone. It is every other physical factor other than land and labor. Social Capital Characteristics of CapitalĬapital is a human-made factor.Physical Capital/Real Capital/ Fixed Capital.We can increase or decrease the supply of capital factor. Capital is a passive factor as it cannot produce anything on its own, it requires labor for action. It includes all the human made resources involved in the production process. CapitalĬapital is another factor of production. For Instance: Teacher teaches, actor acts, doctor examines etc. We cannot consider labor or laborer independently. Labor and Laborer are inseparable factors. At every level of skill, supply is relatively inelastic. The supply and demand of labor is different for different level of skills. We cannot increase the supply of labor with sudden increase in its demand. Supply of labor is inelastic at a certain given point of time. Supply of labor is relatively inelastic.This is comparatively easier but there are various factors which acts as barrier for the mobility. Laborer transfer its labor from one place to another place, from one location to another location. Labor shows movement hence it is a mobile factor of production. Such instant nature of labor makes it highly perishable. If labor is not use today, labor is lost permanent. we cannot store labor of one day and use another day. It is the only factor that can make use of land and capital factor of production. Labor is an active factor of production.Labor can work on its own and start the production of goods and services Labor’s contribution determines the output in an economy. Labor is one of the most important factor of production because it mobilizes both land and capital. It includes both physical and mental effort made by human beings. It is the effort of human being by head or hand in order to perform any economic activity. In economic terms, the application of land is possible only when labor and capital factors act on it. Land doesn’t provide anything on its own to the owner. There is transfer of ownership of such factor of production. We cannot move the land body from one place to another place. Land is not transferable in its physical form. We cannot increase the supply of land with increase in demand of it. The ownership of land factor by any individual may increase or decrease as per the demand and supply. The land mass will never increase, it will only transfer its form. We cannot increase the supply of land in any economy. The supply of land is limited in the economy.
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