Chapter 6

Q1. What is land and it’s Features?

Ans.

Land:

           By land we does not means only the surface of the earth only. Land is a wider concept in economics, land means everything which is available for humans as a free gift of nature. Land means all the things which are available free from nature.

Features:

 1. Free Gift of nature:

                                        Land is the free gift of nature which is provided to the man kind. Land is not created with human efforts.

2. Passive Factor of Production:

                                                         Land does not produce goods on its own. It produces only when other factors of production are put to work on it.

3. No geographical Mobility:

                                                    Land does not have geographical mobility that means it can be transfer from one place to other place. It can be put for other occupation.

4. Inelastic Supply:

                                  The supply of land is fixed no one raise the supply of land. As the land is not created by human efforts. Man can try to change the quality of land like fertility etc.

5. Permanent and Indestructible factors:

                                                                           Land can’t be destroyed by human. It is permanent and fixed factor of production.

6. Derived demand:

                                   Land is demand when the goods produced on the land have demand in the market. That means land have indirect demand.

7. Diminishing Marginal Returns:

                                                          Land is subjected to diminishing returns. As the capital and labour employed is more the total output will be not same.

8. Site Value:

                        Land is natural factor so the price of land demands upon the place where it is situated like if the land is situated at urban area the prices will be high.

Q2. What is Labour and Its Feature?

Ans.

Labour:

              Labour is one of the living and most active factor of production. Labour is a perishable factor of production. Any exertion of mind and body undergone partly or wholly with a view to earning something in return other than pleasure.

Features:

1. Inseparable from the body of human:

                                                                        Human and his work goes hand to hand that means the human must be present where he have to render his services.

2. Human and active factor of production:

                                                                           Labour is provided by the human itself so the human have likes and some dislikes and he can’t be treated as machine. All other factors are productive only when the labour is put with them.

3. Labour sells his labour not himself:

                                                                   Labour sells his work not himself his body is his own property.

4. Restricted Mobility:

                                         Labour can be transported from one place to another place and from one occupation to other occupation but due to family attachment and climatic condition the mobility is limited.

5. Perishable Factor:

                                     Labour is the perishable factor of production. If a labour is absent for one day that means the labour is lost for one day that means labour cannot be stored.

6. Efficiency of Labour:

                                           Efficiency of labour differs from person to person. This feature depends upon the skill, training and education of labour. Labour can be classified as skilled, unskilled and semi-skilled.

7. Less Bargaining Power:

                                                 Individual labour have weak bargaining power. He accepts low wages than being unemployed. But today trade union is fighting for the rights of the consumers.

8. Inelastic Supply of Labour:

                                                    Supply of labour can’t be increased as the demand as the age of working is from 15-59 only.

Q3. What is Capital and Its Features and its types?

And:

Capital:

               It is the important factor of production. It is a productive factor of productions. It is said that capital is the produced means of productions that means without capital production is not possible.

Features:

1. Man Made factor:

                                      Capital is a manmade factor. As man produces capital in the form of building, plant, machinery etc. so capital is called manmade factor of production.

2. Mobile Factor of production:

                                                         Capital is the most mobile factor of production. It has both occupational as well as geographically mobility. Capital can be easily transferred from one place to another and from country to another.

3. Passive factor of Production:

                                                         Capital have derived demand. Capital become productive only when labour is employed, it cannot produced anything of its owns however it increase the efficiency of factors

4. Elastic supply:

                             The supply of capital is elastic. As capital can be increased or decreased as per the need. Supply of capital can be increased by increasing in saving and investment.

5. Derived Demand:

                                   No factor of production have direct demand they are demanded indirectly. Capital is demanded indirectly as the machinery is only purchased when the goods produced by the machinery have demand.

6. Capital is a part of wealth:

                                                     Whole wealth can’t be called as wealth. Capital is only a part of wealth. Capital means the part of wealth which is used in the process of production.

7. Durability:

                       Capital is the most durable factor of productions as capital can be fixed assets which remains into the business for a long period of time.

8. Productive Factor:

                                    Capital is the most productive factor than any other factor. Use of capital increase the efficiency of the labour and land and also increases the total output.

Types Of capital:

1. Based on ownership

A. Private Capital:

                               It is also known as personal capital. It is owned by private firm, individual etc.

B. Public Capital:

                               It is also called as social capital. It is a capital collected from government, society etc.

2. Based on durability:

A. Fixed Capital:

                            It is a capital which is kept into the business for a long period of time like plant, machinery etc.

B. Working Capital:

                                  It is also called as circulating or variable capital. It is used only once in the production process that means it is a recurring capital.

3. Based on Mobility:

A. Sunk Capital:

                             It is capital which is used for a specific business activity only like Xerox machine, road roller etc.

B. Floating Capital:

                                 It is a capital which can be used for any purpose like electricity, coal etc.

4. Based on Nature:

A. Real Capital:

                            It is a physical capital used in the production process like machinery. It is used to produce other goods.

B. Money Capital:

                             It is in the form real money. Real capital can be purchased like raw material etc. with the help of money capital.       

Q4. What is Entrepreneur and its features and its function?

Ans:

Entrepreneur:

                          Entrepreneur plays a vital role in the process of production. He is the person who manages all the factor of production. He is the innovator of new things in to the business. He helps to carry out business efficiently. He is a person associated with innovations.

Features:

1. Efficient:

                     Entrepreneur is a person who is highly intelligent and efficient who can solve the problem arising in the business.

2. Organizer:

                        He has the quality to arrange all the factors of production. He has the ability to arrange the factors of production systematically to make them work more efficiently.

3. Leadership:

                         The Entrepreneur must have the quality of lead every factor of production. He should put right person at right job. The most important function of entrepreneur is to have leadership quality.

4. Self-Confident:

                                 Entrepreneur must be a confident person. He must think that the decision taken by him is right. He must be confident on the decision taken.

5. Bold and courageous:

                                           The entrepreneur must be bold and courageous and must be ready to face difficulties coming in the business.

6. Innovator:

                        The entrepreneur must be the person who is filled with innovation function. He must try to keep on bringing new technique to reduce the cost.

7. Knowledgeable:

                                 The entrepreneur must be the person who is filled with knowledgeable. He must have complete knowledge about his business.

8. Vision and foresight:

                                        He must be the person who has a vision and foresight to imagine and judge about the effects of the decision he have taken.

Functions:

There are three functions. They are

A. Organize Function

B. Risk and Uncertainty Function

C. Innovative Function

A. Organize Function:

                                        The entrepreneur have to perform organizing functions:

1. Factors Co-ordinating:

                                             Entrepreneur must co-ordinate all the factor of production. When he will co-ordinate all the factors of production then only production will take place.

2. Decision Maker:

                                 Entrepreneur is the single person who takes all the decision of the business. He have to take certain decision like how to produce what to produced etc.

3. Planning:

                     Before stating the production process the entrepreneur must plan. So during the production they can make necessary change to reduce the cost and increase the profit.

4. Supervision:

                           As he is the manager of the business he need to keep a supervision on the work done by the factor of production. He needs to keep a continuous watch on production active.

5. Making Factor Payment:

                                                  Entrepreneur make payment to all the factors of production that is rent to land, wages to labour, interest to capital and profit for himself.

                  

B. Risk and Uncertainty bearing function:

                                                                            It is unique function performed by the entrepreneur. It is responsibility taken by the entrepreneur.

1. Insurable Risk:

                              There are some risk which can be insured like fire, marine etc. This can help to reduce the loss in the business.

2. Uninsurable Risk:

                                     There are some risk which can’t be insured so the entrepreneur has to bear the risk like change in the fashion, close Substitute or government policies etc.

C. Innovative Function:

                                         The most important function of the entrepreneur is to make innovations in to the business. He must bring new technology, find new market etc. so that there is the reduction in the cost of productions which will lead to maximisation of profit.

 

   

           

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