Business Economics: A basic understanding of the Four Factors of Production (Essential for those just starting to learn Business Economics and understanding the production process)

4 Production factors: 1.Natural resources 2.Human resources (labour) 3.Capital 4.Entrepreneurship Raw material changed into a certain final product e.g. Milk Chocolate Chocolate sweets The input needed to change raw materials into final products is known as production factors. In most cases, all four-production factors are used to make final product. Not all 4 factors are always available. Therefore, there is a shortage of certain production factor (Raw material) 1.Natural Resources a)Agriculture- fruit, vegetables and meat …

…ntrepreneur decides how the other 3 production factors can be used to the best advantage of the enterprise. An Entrepreneur must have the ability to spot new and better ideas, and the courage to implement them. As a result of a major shortage of entrepreneurs in the country, various south african colleges and universities have a special section for the development of Entrepreneurs. Remuneration of Production factors Land -Rent Labour-Wages and salaries Capital-Interest Entrepreneurs-Profit