1. The aim of production is to produce the goods and services that we want.
2. There are four requirements for the production of goods and services.
They are:
- Land
- Labour
- Capital – (a) Physical or fixed capital (b) Working capital
- Knowledge and enterprise
Land: The first requirement is land, and other natural resources such as water, forests, minerals. It is a free gift of nature and it is neither created nor destroyed.
Labour: It is a factor which helps in production. There are three types of labour – skilled, semiskilled and unskilled. Some production activities require highly educated workers to perform the necessary task. Other activities require manual work. Each worker provides the labour necessary for production.
