What is the aim of production? Explain the four factors of production of goods and services.
The aim of production is to produce goods and services to satisfy the needs of people as per their demand.
Four factors for production of goods and services are as follows :
- Land Land and other natural resources such as water, forests, minerals etc.
- Labour or Workers The workers provide necessary labour for production. They may be highly educated or illiterate persons (i.e. skilled and unskilled) who may do manual work.
- Physical Capital It consists of various inputs which are required at different stages of production.
It is of two types :
- Fixed Capital Like tools, machines, buildings, generators, computers etc.
- Working Capital It consists of raw materials (like yarn for weavers), money in hand.
Human Capital We need knowledge and enterprise in order to put together land, labour and physical capital to produce an output. So, a population that is educated, trained and healthy becomes human capital.