Factors of Production

terials, manufacturing of final products, transferring things from one place to another, management of production, and services like the ones rendered by physicians and teachers.
One can classify labour into productive and unproductive. The former produces physical objects having utility. The latter is useful but does not produce material wealth. Labour of the musician is an example.
Unlike other factors of production, for example capital, once workers are employed, their efficiency can vary greatly with organization of work and their motivation.
Demand for labour is influenced by the demand for goods produced by workers, the proportion of wages in total production costs, etc. The supply of labour depends upon the size of population, geographic mobility, skills, education level (human capital), etc. Workers supply labour either individually or through trade unions. If demand for and supply of labour are not in equilibrium, there is unemployment. The rate of unemployment is a percentage of the total labour force without a job. It is desirable for an economy to have the lowest possible unemployment rate and to achieve higher employment as neither full use of resources nor maximum level of output can be achieved in an economy having unemployment.
Factors of production are combined together in different proportions in order to produce output. It is assumed in economics that one should choose the combination of factors which minimizes the cost of production and increases profits.
The third factor of production, natural resources, poses too many economic problems3to be discussed here. We will analyze them in the following unit.
Пояснения к тексту
1. is common practice - зд. общепринято
2. claims against - требования; претензии на что