SUBJECT: ECONOMICS
Topics:- Factors of production
-Land
-Labour
OBJECTIVES
Students should be able to;
• Define a factor of production
• Identify the four factors of production
• Describe land as a factor of production, giving examples.
• Describe labour as a factor of production
• Define terms and concepts associated with labour
FACTORS OF PRODUCTION
• Factors of production: can be classified as human and non-human.
The human resources of a country are the labour force and
entrepreneurs. A non-human resource is land. Capital is both a human
and non-human resource.
Types of factors of production
• Land; is defined as all the naturally occurring free gifts of nature.
• Labour; is the physical and mental effort of man in the production
process.
• Capital; refers to all the goods used to produce more goods.
• Entrepreneurship; refers to the risks involved in organizing the
other three factors of production.
LAND AS A FACTOR OF PRODUCTION
• Land; is defined as all the factor services available naturally, whether
on, above or beneath the earth’s surface. It is made up of all the free
gifts of nature.
Types of the factor land
1. Land itself on the earth’s surface that can be used to grow crops or
build homes, offices and factories.
2. Land above ground – eg. Gases in the atmosphere and climatic
conditions.
3. Seas and rivers – eg. Fish in the seas or rivers, and coral reefs for
tourists to visit.
4. Resources beneath the earth – eg. Mineral deposits such as
bauxite and petroleum.
CHARACTERISTICS OF THE FACTOR LAND
• Land is fixed in supply; the amount of the factor land on the planet
Earth is fixed. We can never acquire more in that sense. However, man’s
ability to tap the resource land could increase as he acquires more
capital and other resources.
• Land has no cost of production; extracting minerals from the earth
requires large amounts of other factors of production. Eg; extracting oil
from the earth requires large amounts of capital. Preparing a plot of land
for agricultural use requires clearing and ploughing. However, it never
costs society, as a whole, anything to produce the land.
• Land is geographically immobile; mobility is the ease with which a
factor of production can move from one place to another (geographical
mobility) or one use/occupation to another (occupational mobility).
Modern technology is challenging the concept of occupational immobile
land, as land has been reclaimed in many coastal areas.
LABOUR AS A FACTOR OF PRODUCTION
Labour as a factor of production
• The labour supply refers to those people who are available for work in the economy. E.g.
the store clerk at a bookstore provides the factor labour. Also does the construction worker
at a construction site.
Characteristics of labour
• Labour is the human factor. Labour services are provided by man.
• Only the worker himself can sell his labour services. In the case of skilled labour,
no one else can perform his services.
• Labour services cannot be stored in the same way as units of land or capital.
• Labour is geographically and occupationally more mobile than land.
• Labour is not homogeneous (uniform). Each unit of labour has different skills and
abilities.
TERMS & CONCEPTS
• Division of labour: this is where the production process is divided into a series of
separate tasks. Workers specialize in a particular task.
• Specialization: this occurs when workers focus on a specific task and become skilled in
that area.
• Labour force: is the number of people willing to work in the economy.
• Labour supply: is the total number of hours that employees are willing to work. E.g., 10
men each working for 50 hours supply 500 man-hours.
Factors of labour supply
1. The size of the population; the larger the population, the larger the supply of labour and
converse is also true.
2. The proportion of the population willing to work; persons that continue to study after the
age of 16, housewives and the disabled decrease the supply of labour
3. The number of hours worked by each individual; overtime increases the supply of labour.
QUESTIONS FOR STUDENTS
• Identify four factors of production
• State two characteristics of land as a factor of production.
• Describe one of the characteristic of land as a factor of production.
• State two characteristics of labour as a factor of production.
• Describe one of the characteristic of labour as a factor of production.
