Factors of production
resources used in the production process to produce output
Factors of production are means necessary for the production of goods and services in economics.
Classical economics has three factors:
- Land or natural resources – goods that exist in nature before any such as soil and minerals and that are used in the creation of products. The payment for land is rent.
- Labor – human effort used in production. That means technical expertise and marketing expertise, too. The payment for labor is a wage.
- Capital goods – human-made goods (or means of production) which are used in the production of other goods. These include machinery, tools and buildings. In a general sense, the payment for capital is called interest or profit.
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