Q. 263.5( 8 Votes )
State the aim of
Aim of Production :-
The aim of production is to produce the goods and services to generate wealth that we want for ourselves.
There are four requirements needed for the production of goods and services. These are described as follows.
1) Land -
Land is fixed and immobile in nature. Land is a free and a valuable gift by nature to mankind. It is used for various purposes such as mining, agriculture, running an industry etc. It is an important requirement for production of goods and services. Without land, production is impossible. Rent is the remuneration for land.
2) Labour -
Labour means human force. Things cannot be produced unless someone makes them. Labour represents all the people that are available to transform resources into goods or services that can be purchased. Labour is not fixed, rather it is mobile in nature. Labour move from one place to another place, one employer to another employer, in search of better opportunity. Wage rate is the remuneration for labour. Labour is another important requirement for production of goods and services.
3) Capital -
we will need money to produce any kind of goods or services. So, capital is called the life blood of all economic activities. It's what capital allows labour and land to be purchased. Steady streams of capital are often required in order to keep a business going. Capital can be further divided into two - fixed capital and working capital. Interest is the remuneration for capital.
4) Human Capital or Entrepreneur -
Entrepreneur is the person who is combining all the requirements of production of goods or services. He puts together land, labour and capital to produce the desired goods or services. The entrepreneur takes risks as he invests his capital in the business. Profit is the remuneration for entrepreneur.
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