microeconomic

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Micro Economics Student’s name Institutional affiliation Date 1. Factors of Production In economics, the factors of production refer to the various inputs, resources, items, goods, and services that are used in the manufacturing process to create finished goods and services. Currently, these factors are identified as producer goods since the final consumer does not use them. There are four factors of production in economics and they include: land, labor, capital and enterprise. In the manufacturing process, the industry requires a combination of all the inputs to generate the output (Krugman, Wells, & Olney, 2007). Land refers to the physical place and all the natural resources where the production activities occur. For example, a fertile farm land, timber, fisheries, temperate climate, and renewable energy. The reward for this factor of production is rent. Labor refers to the human input employed in the manufacturing process. It has the qualities of flexibility, and its reward is wages. Capital refers to all fixed assets and monetary resources used in the production process. The financial items acquire other factors of production. The property classified under capital element includes buildings and equipment. The reward for this resource to the owners is the interest. Entrepreneurship refers to a specialized labor that involves taking risks by individuals through the application of skills and knowledge in investments. Entrepreneurs assume the managerial role in acquiring, allocating and distributing economic resources. Entrepreneurs earn profit from their investments. Land as a factor of production is limited as its supply is always fixed. This

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