Factors of production refers to agents, resources or components that are combined together to produce goods and services. We have only four factors of production which are:
- Land
- Labor
- capital
- Entrepreneur
Land can be defined in economics as a free gift of nature.
Land in economics does not only include land surface of the earth but all other free gifts of nature or natural resources like forest, rivers, mineral resources, atmosphere and oceans. The supply of land is limited unlike other factors of production. The reward for land is rent.
Features or characteristics of land
1. Land is immobile: This means that Land cannot be moved from one geographical location to another geographical location.
2. Land is a free gift: That is to say that Land is given freely by nature.
3. The supply of land is fixed and limited: It is practically not possible for man to increase the quantity of land.
4. Variability: This means that the value and quality of land varies from one place to another as some areas of land are more fertile than others.
5. Subjectivity to diminishing returns: When a piece of land is frequently brought under cultivation, it becomes less productive. Therefore, we can conclude that land is subject to the law of diminishing returns.
6. Land has no cost of production: This means that No cost was incurred by anyone in bringing land into existence.
7. Land is heterogeneous: No two parcels of land are the same in value or in other characteristics.
8. Reward: The reward for land is what we call ''rent''.
Importance of land
1. Farming purposes: Land is used for the cultivation of crops, both food and cash crops, e.g. maize, cocoa and yam. Water provides irrigation for farming activities in dry season.
2. Livestock purposes: It is also used for livestock production (i.e rearing of animals), e.g. cattle, sheep and poultry.
3. Fishery purposes: Land is used for fishery in rivers, oceans and seas. Fish ponds can also be developed on land.
4. As collateral security: Land with Certificate of Occupancy (C of O) is used widely as collateral to secure loans from banks, especially in urban centres.
5. Construction purposes: It is used for construction purposes e.g roads, airports and railways. Sand, stone, gravel and granite are raw materials used for building and road construction.
6. Transportation purposes: Land, air and bodies of water like rivers, oceans, lakes etc. serve for transportation of people and goods from one place to another.
7. Sources of minerals: Land is the source of minerals like limestone, tin, gold and petroleum, which can serve as revenue to the government.
8. For both industrial and residential buildings: Industrial buildings, residential buildings as well as housing estates are sited and built on land.
You can also read the following related topics:
1.Labor as a factor of production
2.Capital as a factor of production
3.Entrepreneur as a factor of production
4.Limitations to the scale of production
0 comments:
Post a Comment