Factors of production
resources used in the production process to produce output
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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.