NCERT Class 8 Social Science Exploring Society India and Beyond Part 1 Chapter 07 Factors of Production PDF Download

Chapter 7: Factors of Production

For a country like India, the largest contribution to growth and productivity will probably come about from more efficiently using land, labour and capital, thus they must be used more efficiently.

- Bibek Debroy, Chairman, Economic Advisory Council to the Prime Minister (2017-24)

The Big Questions

1. What are the factors of production?
2. How are these factors interconnected?
3. What is the role of human capital in production, and what are its facilitators?

[Figure 7.1: Images showing satellite technology, agricultural machinery, factory work, manufacturing equipment, and office collaboration, See in your textbook]

Introduction

Have you ever wondered how your clothes, shoes, school bag, furniture, phone, computer, etc., are made? Every product around you goes through a production process before it finally reaches you. This production process involves using resources or inputs required to produce the final product. The resources or inputs used in producing goods and services are hence called factors of production.

Businesses or Enterprises combine various inputs or factors of production to create goods and services, which also generate opportunities for people to engage in economic activities.

Business or Enterprise: A firm, a shop, a factory, etc., which produces or sells goods or provides a service.

Meet Ratna, who runs a small restaurant named Pause Point, on the city outskirts. Popular among highway travellers for its tasty, high-quality food, Pause Point is growing with a team of seven people who assist Ratna in managing the business. When she started five years ago, she had to choose a location, organise money for rent and equipment, hire staff, buy ingredients, and plan how to make her dream a success.

[Figure 7.2: A glimpse at the production of some goods, See in your textbook]

Let's Explore

• In small groups, study the economic activities around your locality. What are the different types of goods and services being made or provided?
• Here's a small report that Latha, Asha, Mohan, and Kiran made. You can make your own report for shops of your choice.

Looking at your group's report, think about the following:

• Where do people get the money that they need for their business?
• Where did the hairdresser get trained?
• Who taught the food vendors to cook?
• What motivated the business owners to start their business?

Teacher's Note

Notice how the table shows that every business needs different inputs. A grocery shop needs storage space, while a salon needs electricity and water. When you study factors of production, always ask yourself: what physical things, money, and skills does this particular business require? This helps you understand why different businesses have different production needs.

Key Points

• Factors of production are the resources or inputs used to make goods and services, such as land, labour, capital, and raw materials.
• Every business combines different factors of production in different ways depending on what it produces or the service it offers.
• Starting and running a business requires planning and organizing several factors, including choosing a location, arranging money, hiring workers, and obtaining necessary equipment and materials.

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