There are four requirements of production of goods and services. These requirements are known as factors of production.
These are :
(i) Land: By land we mean not only the level surface but all gifts of nature which are amenable to human control, such as water, forests, minerals, etc.
(ii) Labour:Manpower required to do the work. The mental and physical work done by people in an organisation comes under labour.
(iii) Physical Capital: It means a variety of inputs required at every stage during production.
They can be classified as:
(a) Fixed capital:It includes tools, machines and building that can be used for production for many years.
(b) Working capital:Money in land and raw material that has to be used in current products are included in working capital.
(iv) Enterprise: It means need of knowledge and enterprise to put together all other factors of production and ability to sell the produce in the market. This is also called human capital.
