The four production factors are:
i. Land: The land is defined broadly as a factor of production and can take many forms, ranging from agricultural land to commercial real estate to the resources accessible from a specific piece of land. The land has natural resources that may be exploited and refined for human consumption, such as oil and gold. When man alters any of these resources from its original state, it becomes a capital good. For instance, although oil is a natural resource, gasoline is a capital good. A retail mall is a capital good, but farmland is a natural resource.
ii. Capital: Capital refers to man-made goods that are utilised to generate more riches. As a result, it is a manufactured material source of production. Alternatively, capital refers to any man-made production aids that are not consumed for their own sake. To put it another way, items that can be used or consumed in the manufacture of other things. Machines, tools, houses, roads, bridges, and industries are all examples.
iii. Labour: It is defined as human work that is done mentally or physically with the goal of generating money. As a result, it is a physical or mental effort made by a human being during the production process. Wages are the remuneration given to workers in exchange for their productive work.
iv. Entrepreneur: An entrepreneur is an individual being who arranges the other variables in a production and takes on the risks and uncertainties that come with it. He hires the other three factors, gets them together, organises, and coordinates them so that they can make the most money possible. An entrepreneur, for example, is someone who takes the risk of producing television sets.
Factor payments or factor incomes refer to the remunerations given to the factors of production. Rent, wage, interest, and profit are added together to form these figures.