Factor of Production

Factors of production are the resources used to create goods and services. They include land (natural resources), labor (human effort), capital (man-made tools and equipment), and entrepreneurship (skills to organize and innovate). These elements work together in the production process to meet the needs and wants of society. Understanding these factors helps explain how goods and services are made and why production costs vary. Essentially, they are the essential inputs that drive economic activity and support the creation of everything we use daily.