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Answer» Production: - The activity of converting raw materials and resources into final goods which satisfy human wants is called production.
- By converting the nature of resources, their utility increases. In this sense, production can also be defined as a process which increases utility of resources.
Example:
When wood (a resource) is converted into chairs its utility increases. The process of converting wood into chair is called production. Factors of production: - The agents that help in a process of conversion or production are called ‘Factors of Production’. There are four factors of production. They are:
- Land
- Labour
- Capital and
- Entrepreneur.
- All these factors are equally important in the process of production.
- In a system of just (fair) distribution of income, the total income generated from various activities is distributed among each factor of production as per the productivity of each factor or its contribution in generating that income.
- As per Alfred Marshall, there are two basic categories of factors of production
- Nature and
- Human beings.
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