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In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relationship called the production function .
The inputs to the production function are commonly termed factors of production and may represent primary factors, which are stocks. Classically, the primary factors of production were land, labour and capital. Primary factors do not become part of the output product, nor are the primary factors, themselves, transformed in the production process.
Factor price equalization – The relative prices for two identical factors of production will eventually be equalized across countries because of international trade. Stolper–Samuelson theorem – A rise in the relative price of a good will lead to a rise in the return to that factor which is used most intensively in the production of the ...
Production can be either increased, decreased or remain constant as a result of consumption, amongst various other factors. The relationship between production and consumption is mirror against the economic theory of supply and demand. Accordingly, when production decreases more than factor consumption, this results in reduced productivity.
Wire-grid Cobb–Douglas production surface with isoquants A two-input Cobb–Douglas production function with isoquants. In economics and econometrics, the Cobb–Douglas production function is a particular functional form of the production function, widely used to represent the technological relationship between the amounts of two or more inputs (particularly physical capital and labor) and ...
The ownership and organization of the social means of production is a key factor in categorizing and defining different types of economic systems. The means of production includes two broad categories of objects: instruments of labor (tools, factories, infrastructure, etc.) and subjects of labor (natural resources and raw materials).
The comparative advantage is due to the fact that nations have various factors of production, the endowment of factors is the number of resources such as land, labor, and capital that a country has. Countries are endowed with multiple factors which explains the difference in the costs of a particular factor when a cheaper factor is more abundant.
Factors of production is included in the JEL classification codes as JEL: D33 Wikimedia Commons has media related to Factors of production . The main article for this category is Factors of production .