Definitions [3]
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.
Define real capital.
Real capital means capital goods. Real capital has greater impact on national output (or income) as it directly helps in increasing production.
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.
Important Questions [16]
- Identify the factors of production of the following case and differentiate between them. An active and passive factor of production.
- Which factor of production is not a hired factor?
- The reward of an entrepreneur is in the nature of ______.
- Which of the following types of capital gets exhausted after its use and gets embodied in the finished product?
- Mention two differences between an entrepreneur and other factors of production.
- What do you mean by 'innovative ability' of an entrepreneur?
- Explain complex division of labour with the help of an example.
- Define capital.
- Explain any three characteristics of capital.
- What do you understand by the term 'Capital formation'?
- Explain any three factors which affect capital formation.
- The Indian labour suffers from low efficiency. Explain your answer with three reasons for low efficiency of Indian labour.
- What do you understand by ‘changing pattern of land use’?
- Explain any three such changes causing destruction to the ecosystem. Mention three causes of destruction of ecosystem.
- Use of high yielding variety of seeds of related to productivity of ______.
- State any three differences between labour and capital.
Concepts [12]
- Factors of Production
- Difference Between Capital and Other Related Concepts
- Differences Between Land and Capital
- Differences Between Capital and Labour
- Characteristics of Capital
- Types of Capital
- Functions of Capital
- Is Land Capital?
- Factors Influencing Or Affecting Capital Formation
- Significance of Capital Formation
- Causes of Low Rate of Capital Formation
- Suggestions to Raise Rate of Capital Formation
