Businesses must constantly upgrade their capital to maintain a competitive edge and operate efficiently. The production process of an organization can be efficient, if there is an optimal use of factors. Land in economics means natural resources. wheat and maize.. Some of these inputs in a normal situation are “free.” This factor of production includes machinery, tools, equipment, buildings, and technology. It includes all those things which are found under and over the surface of earth. Hence, it can increase production efficiency and act as a factor of production. L and as a Factor of Production:. By technology, we mean hardware and/or software that works to improve and increase the efficiency of production. Each factor of production has a unique type of payment associated with it, called factor payments. The factors of production are capital, labor, and land. Labor. You might ask, isn't money a type of capital? Even though entrepreneurship is not part of the classical factors of production, it is often added to the list as a fourth factor. The reasoning behind this is that entrepreneurship often leads to innovation, new processes, or new products. Meaning and Definition: The term land in economics is used in a special sense. Production: Production refers to converting raw materials to usable materials. A company's production can be represented graphically as a production curve. It d oes not mean soil or earth surface alone. In economic terms, money is not a factor of production because it is a resource used to acquire resources that go into producing goods. The factors of production include land, labor, capital and entrepreneurship. Technology and the Factors of Production. In economics, “factors of production” are the inputs used to create finished goods (i.e., the actual products we buy). This implies that the factors of production should be used in combination, so that the production target can be achieved. Technology is not considered an official factor of production on our list, but it is significant within the realm of production. Simply stated, factors of production are the “ inputs” necessary to obtain an “ output.” However, not all the “inputs” that must be applied are to be regarded as factors in the economic sense. Entrepreneur A person who, operating within the context of a market economy, seeks to earn profits by finding new ways to organize factors of production. Summary These are workers. It, however, is not only limited to creating things, but it also involves doing everything possible to ensure that the goods produced can satisfy human wants. The following is an adapted excerpt from my book Microeconomics Made Simple: Basic Microeconomic Principles Explained in 100 Pages or Less. 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