Factors of Production

Production involves the creation of physical products such as cars, televisions, and pens or intangible products such as education, travel, and cleaning services.

Inputs or factors of production are the resources that a firm uses to make the products. While some economists list land, labor, capital, and entrepreneurs as the primary factors of production, others list capital, labor, and raw materials.

Consider a firm that produces ice cream. 

Land includes the physical space on which the factory is built. Raw materials are ingredients, including fruits, sugar, and nuts.

Labor is the next factor, which includes many different jobs, such as chefs, flavor chemists, quality control specialists, the marketing team, and security staff.

Capital is another factor that includes ice cream makers, mixers, packaging machines, refrigerated storage facilities, and factories.

An entrepreneur is the factor that brings together all the above factors of production.

For example, entrepreneurs Burt Baskin and Irv Robbins founded the famous Baskin-Robbins company, which is renowned for its 31 flavors of ice cream for each day of the month.