Economics » Factors of Production » Features and Rewards

Land as a Factor of Production

The factors of production are the resources (input) used to produce final products (output). They refer to all tangible and intangible resources that are combined or co-ordinated for the production of goods and services. There are four (4) factors of production namely:

  • Land
  • Labour
  • Capital
  • Entrepreneurship

Land

This refers to all natural resources available for production purposes such as water resources, lakes, forests, mineral deposits, etc. Marshall has defined land as “the materials and the forces which nature gives freely for man’s aid, in land and water, in air and light and in heat.”

Features of Land

  1. It is a free gift of nature.
  2. It is considered an immobile factor of production.
  3. It is subject to the law of diminishing returns.
  4. The reward for land is rent.
  5. It is considered to be available in fixed quantity; therefore, it does not have a supply price. This implies that the change in price of land does not affect its supply.

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