What are the factors of production?

By the concept of production factors we understand the entire set of resources that are used to create a product, good or service by a company, entity or institution. He was the classical economist Adam Smith who was in charge of defining this concept.

Each and every one of the production factors has a fundamental weight in our economía, since if these factors do not work and do not produce a return, we would not be where we are today. This is the basic premise for any type of company to achieve its objectives.

Classification of factors of production

Although traditionally there have been three main factors of production, today we speak of four. Take note of how the factors of production are classified and what role each plays.

  • The first of all of them is the land: the land is conceived as the set of natural resources that are used throughout a production process. That is, all those natural resources that are used to make a product, good or service. Let's take an example, the resources offered by water, its sources and reservoirs.
  • Second, work. When we talk about work, we mean human resources. It is the whole set of human capacities that are used throughout a production process of a product, good or service, regardless of whether this contribution is physical or mental. Normally in economic studies work is represented by the letter "T".
  • Third, we find capital, which refers to the set of resources, tools, machines or durable goods that are needed during the production process of any product, good or service. However, some authors divide this capital into human and financial, I feel that human capital, as its name indicates, refers to the set of people who are needed for this process, and financial capital, which is formed by economic resources. . In short, capital refers to appreciation.
  • Finally, we find technology, which is understood as the set of techniques, tools and procedures that help us create, develop and take advantage of a product, good or service.

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