Laborers with a great deal of training and education are considered to be “highly skilled” and are paid higher wages than less trained workers. In production, wages are paid based on workers’ skill levels as well as the time invested in work. Largest source of income for most people. The income earned by labor resources is called wages. Job, you have contributed labor resources to the production of goods or On the more physical side of labor might be food service workers, construction workers, or factory workers. On the mental side of this factor of production are laborers like artists producing art, or programmers creating software. Labor was considered to be the main source of economic value according to early, influential political economists (several of whom are described in the first section of this article).Įxamples of labor range from the very physical to primarily mental work that goes into production. Generally speaking, the higher the quality of labor, the more productive the workforce. The quality of labor depends on the workforce’s skills, education, and motivation. It is any work done by people contributing to production. Labor, as a factor of production, involves any human input. Land was designated as the origin of economic value by the physiocrats, a collection of French economists who came before the better-known classical political economists (Smith, Ricardo, Marx, and others). For instance, land is a central focus of virtually all agriculture but is much less important to a tech company that is quite literally operating in the virtual sphere. Although land is undeniably crucial to most forms of production, just how essential it really is varies depending on the industry. The income earned from land or other such natural resources is called rent. These resources can be renewable, such as forests, or nonrenewables such as oil or natural gas. They can range from land used for agriculture to that used for commercial real estate, as well as the natural resources derived from land. Some typical examples of natural resources are water, oil, copper, natural gas, coal, and forests. These resources are gifts that are given by nature. “Land” is quite a broad category as a factor of production in that it refers to all natural resources. This table shows who owns the factors of production in four of the most important economic systems, and what these factors are valued for in each system. For example, in a capitalist economy, the factors of production are owned by individuals who use them for their own profit. Sometimes the type of economic system decides the ownership of the factors of production. Factors of Production and Type of Economic System Influential political economists like David Ricardo, Karl Marx, and Adam Smith initially labeled land, labor, and capital as the factors of production. Other strains of economic theory also contribute to our current understanding, including socialism’s view of labor as one of the factors. Our understanding of the concept of factors of production is rooted for the most part in neoclassical economics. Similar Posts: History of the Concept of Factors of Production
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |