Definitions [2]
Define production.
Production means creation of 'material goods' only. For example, if a farmer is growing wheat, we will say the farmer is producing wheat. Likewise, if a carpenter is making a table, it will be said that the carpenter is producing table. Adam Smith, 'the Father of Economics', has defined production in this sense. According to him, "Production means production of material goods only."
Define capital.
Capital consists of all those goods, existing at present time which can be used in anyway, so as to satisfy wants during the subsequent years.
Key Points
Key Points: Factors of Production
- Four main factors: Land, Labour, capital, and Entrepreneurship.
- All production needs these factors.
- Each factor works together to create goods/services.
