Advantages And Disadvantages Of Factors Of Production
FATORS OF PRODUCTION
DEFINTION:
Factors of production is defined as “what people use to produce goods and services”. The recognized factors of production are land, labour, capital, and enterprise.
IMPORTANCE:
The concept of the factor of production is of great importance in modern economic analysis. It is used in the theory of production in which the various combinations of factors of production help in producing output when a firm operates under increasing or decreasing costs in the short run, and when the returns to scale increase or decrease in the long run. Further we can also know, how can the least cost combination of factors be obtained by a firm.
The theory of cost of production also depends upon the combinations of factors employed
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Adam Smith explained the advantages of the division of labor , a worker can produce only an example to help the 20-pin every day . If the construction of the pin in one of the modern factories is divided into 18 processes then 18 workers to produce 48,000 pins in a single day.
• Increase in efficiency of labour-
With the division of labor , workers have to do the same work time and time again , he gets specialized. In this way, the division of labor leads to greatly increased efficiency.
• Increase in skills-
Division leads to the development of skills , because there is the same repetitive work , he becomes specialized in it . This specialization makes him do the work of the best way to improve their skills.
• Increase in the mobility of labour-
The division of labor promotes greater labor mobility . In this, production is broken down into different parts , and a worker trains into the process time and again in the production of goods where he gets trained in that specific task. He becomes a professional , which lead to occupational mobility . On the other hand , the division of labor means that large-scale production and workers come from far and near work. Thus , it increases the area of labor
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