The resources that are needed to create wealth are brought into the market by factors of production: labor, land, capital. Economic resources - this is all the resources of nature, man and produced by people that are used to produce services and goods.
The main factors of production
The concept of labor includes labor resources (i.e. labor), which are characterized by various qualities. The quality and quantity of labor offered on the market depends on the structure of social production. The needs of production for the labor force of certain specialties are satisfied by households that supply labor market workers.
Labor - the ability and ability of a person who has certain skills to work.
Features of labor as a factor of production:
- labor is formed over many years;
- continuous renewal and reproduction of the workforce is necessary;
- it is important to maintain work skills and physical fitness of the employee.
A person is able to work 25-40 years of his life, and this requires material support for the family with the help of labor.
The next factor of production is land. It supplies resources for construction, agricultural land, natural resources that are extracted from land, forests, reservoirs. All these resources are involved in the creation of many goods. In production they use several at the same time, because without raw materials, as well as buildings on the ground, it is impossible to create benefits.
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The third factor of production is capital (monetary, commodity, productive). The form of capital is initially cash. Capital or money that has been put into circulation changes shape, turning first into commodity, then money. In the production process there is an increase in money capital.
To create a good (product or service) it is necessary to combine several different resources. Society needs approximately two million kinds of goods. To create these benefits, it is important to combine various resources, but one kind of them is also used.
A person is always faced with the problem of choice, and at the same time, production is faced with the alternative use of resources. Society constantly decides which benefits are necessary in the first place, and which can be discarded. Efficiency of use of resources determines their distribution between industries.
Problem of choice in the conditions is enough limited resources - an important issue of efficiency.
By efficiently distributing resources, it is easy to achieve the highest possible output.
The price of resources is formed, taking into account such nuances:
- income and profit. In the resource market, households that have the resources receive income for them (wages, interest, and profits);
- resource allocation. It is carried out depending on the prices for them, distributes resources among various industries;
- minimization of costs. The cost of production for a firm is the price of resources. To get a big profit, production needs to produce profitable profitable products with an effective combination of inexpensive resources;
- economic policy. Fair pricing of resources, as well as fair distribution of income, are important aspects of economic activity.
Factor Markets
Factors of production include such important groups of resources as land, natural resources, artificial raw materials, labor of various qualifications and specialties, capital and technical resources. All of them relate to the sphere of commodity circulation - markets of factors of production.
The movement of any factors of production depends on the market of money and securities, as well as the economic policy of the state.
Features and characteristics of the market of factors of production:
- standard laws of supply and demand, price competition;
- deep socio-economic ties;
- the buyers of labor, land, capital, natural resources are firms and enterprises.
- Firms use different types of costs for the production of services and goods: raw materials,
- goods produced by various companies,
- types of labor of different qualifications,
- capital goods (for example, a building or a car),
- various forms of business activity,
- information.
Factors of production location
Those factors that relate to the distribution of productive forces are many conditions and resources, as well as their properties, with the correct use of which the best result is achieved. These factors affect the distribution of production forces.
Accommodation conditions include the natural environment, population, material and technical and scientific base, production communications system, production development conditions.
Factors and conditions are interrelated and affect the development and location of certain enterprises, the territorial economic organization in certain regions.
Groups of factors distinguish the following:
- natural - the qualitative composition and quantitative reserves of natural resources, their extraction and use in various territories. They play an important role in the location of industry and production (fuel, energy, water-intensive and others);
- socio-economic - especially the distribution of the population, the territorial concentration of labor resources and their qualitative characteristics;
- market-infrastructural and material-technical - market infrastructure as well as material and technical and scientific bases;
- technical and economic - the costs of production and sale of materials, raw materials, finished products.
Thus, for any branch of the economy, an individual set and a combination of all factors of accommodation are characteristic. The role and combination of individual factors relating to the location of the economy in a particular area depends on the structure of the economy of a region or country.
