£199.99 £139.99 for one year of Unlimited learning. Offer ends on 14 November 2022 at 23:59 (UTC). T&Cs apply

Find out more
Factors of production
Skip main navigation

Factors of production

Identify the factors of production and explore how they work together to make a simple economy.
© Coventry University. CC BY-NC 4.0

The key resources found in an economy are:

  • Land, which earns rent
  • Capital, which earns interest
  • Labour, which earns wages or salaries
  • Entrepreneurship, which earns profit

If you look around your environment, you should be able to visualise each of these factors of production.

A farmer labelled labour is driving a tractor labelled capital on his field labelled land. A thought bubble with a lightbulb is coming from the farmer's head, which is labelled entrepreneurship. Copyright macrovector/freepik


Land takes the form of the earth that we walk every day. It includes anything that grows, such as food and wood. The oceans and what lies beneath the ground is also classified as land. Minerals such as coal, gold, oil, natural gas and other compounds are examples of land, as are resources found in the oceans and extracted from the air.


Capital consists of resources that are used to make other products. Tools and machines that manufacture complex products are examples of capital. Money is included in capital, as it enables tools and machines to be created. Roads, ports and other logistics infrastructure is known as national capital, especially if paid for by governments.


Labour, or human resources, are the humans who operate the tools and resources, work on the land, and whose mental and physical efforts transform resources into a product.


Entrepreneurship is the creative ability to combine land, capital and labour to develop new products and services that people in society are prepared to purchase. There is an element of risk-taking in entrepreneurship, as it’s difficult to be certain whether those new products will be popular, or whether anyone wants new products. The economy is littered with examples of failed enterprises.

In addition, just getting new products to retail locations where consumers can try and buy them requires a huge expense of scarce resources, an effort which might not be rewarded by profit, but losses.

Your task

Discuss how your employer, or one you are familiar with, utilises factors of production to create their goods or services. Write a short description in the comments area, making sure you use the four key terms (land, capital, labour and entrepreneurship) for the factors.
© Coventry University. CC BY-NC 4.0
This article is from the free online

What is Economics in Global Logistics?

Created by
FutureLearn - Learning For Life

Our purpose is to transform access to education.

We offer a diverse selection of courses from leading universities and cultural institutions from around the world. These are delivered one step at a time, and are accessible on mobile, tablet and desktop, so you can fit learning around your life.

We believe learning should be an enjoyable, social experience, so our courses offer the opportunity to discuss what you’re learning with others as you go, helping you make fresh discoveries and form new ideas.
You can unlock new opportunities with unlimited access to hundreds of online short courses for a year by subscribing to our Unlimited package. Build your knowledge with top universities and organisations.

Learn more about how FutureLearn is transforming access to education