Q. 93.7( 3 Votes )

Explain the four requirements of the production of goods and services.

Answer :

The four requirements that are essential for the production of goods and services are:


1. Land


2. Labour


3. Physical capital


4. Human capital


1. Land:


The land is a natural resource. It is the primary factor of production of goods and services. Right from farming to setting up an industry, the land is required. As far as agricultural activities are concerned, a fertile and well-irrigated land is needed. Land for other industrial purposes depends on its location and the possibility to build a good infrastructure.


2. Labour:


Labour refers to the people who actually do the work. The necessity for skilled or unskilled, educated or uneducated depends on the nature of the production activities involved.


3. Physical capital:


Physical capital is the monetary investment needed at every stage of production. There are two types of physical capital, fixed capital and working capital.


(a) Fixed Capital:


Machinery and other equipment which require one-time investment but the benefit of which can be used in production over many years is called fixed capital.


(b) Working Capital:


Working capital refers to the money and other raw materials which are in hand. Working capital is needed on a day to day basis and in every stage of production. This money is used to make payments and also to buy the necessary items.


4. Human capital:


The resource which has to be put along with land, labour and physical capital is called Human capital. Human capital is the storehouse of skill and product knowledge. This resource is necessary for the optimum utilisation of the other requirements.


All the four requirements, if properly utilised, can contribute to the development of the economy.


Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Related Videos
Champ Quiz | People as ResourcesChamp Quiz | People as ResourcesChamp Quiz | People as Resources41 mins
Let's Check Your Economics Knowledge-Rapid RevisionLet's Check Your Economics Knowledge-Rapid RevisionLet's Check Your Economics Knowledge-Rapid Revision47 mins
NCERT | People as ResourcesNCERT | People as ResourcesNCERT | People as Resources51 mins
Estimating the power of a common manEstimating the power of a common manEstimating the power of a common man50 mins
Understanding The Dimensions of PovertyUnderstanding The Dimensions of PovertyUnderstanding The Dimensions of Poverty51 mins
Tackling the Poverty-Schemes and PlansTackling the Poverty-Schemes and PlansTackling the Poverty-Schemes and Plans49 mins
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
caricature
view all courses