CLASSIFICATION OF THE FACTORS OF PRODUCTION
The factors of production are traditional classified into land, labour, capital and entrepreneurship.
Distinction between the factors of production is possible.
It is very difficult to distinguish land from capital or labour from entrepreneurship.For example; The seeds and minerals are found in nature so they are land, but seeds and mineral are also raw materials hence they are capital.
Therefore the distribution between land and capital is just a matter of “time” in short seeds and raw materials are gifts of nature but in the long run they are capital.
Substitution between factors is possible .i.e. it is possible to substitute land for capital or substitute labour for capital. A farmer may increase the size of land for cultivation or on the existing land another one may improve seeds and use more fertilizers.
Also one can employ the labour or use machine; hence economists have classified the factors of production into specific and non- specific factors of production.
- SPECIFIC FACTORS OF PRODUCTION
Are those factors of production which cannot be changed easily from one use to another use. Such as;-highly skilled teacher
- 2. NON- SPECIFIC FACTORS OF PRODUCTION
Are those factors that can be easily changed from one use to another use. E.g. bare land, unskilled labour, raw materials such as diamond can be capital.
TECHNIQUES OR METHODS OF PRODUCTION
Is the method which is used to produce a commodity. These are techniques of production. It includes;-
- Labor intensive technique.
- Capital intensive technique.
- Land intensive technique.
Is the method where by the big number of workers are used in production using simple tools eg where the labour are employed to firm a land using simple hoes is a labour intensive technique.
ADVANTAGES OF LABOUR INTENSIVE TECHNIQUE
- It helps to reduce the problem of unemployment. More people will be employed.
- It is less expensive (cheap).
The workers especially the unskilled ones may be lowly paid.eg. In the LDCS.
- The maintain and train labour is also less expensive compared to maintain of capital machines.
- It helps to distribute income among individual people and earn income through working.
- It helps to rise government revenue through taxing the workers.
DISADVANTAGES OF LABOUR INTENSIVE TECHNIQUE
- The products produced using labour intensive technique is of low quality.
- Labor intensive technique leads to production of low output.
- It may lead to some labour problems, like;-strikes or demand for higher wages.
- Increased of use of labour intensive technique hinders technological development.
CAPITAL INTENSIVE TECHNIQUE
Is the technique where more of the machines are used in production and less labour is used.e.g Farming with a tractor or using computerized system of production.etc.
ADVANTAGES OF CAPITAL INTENSIVE TECHNIQUE
- It leads to large scale production.
- It improves the quality of the goods.
- It helps to reduce labour problems.No demand for salary increase by the computers or robots.
- It helps to promote technological advancement.
DISADVANTAGES OF CAPITAL INTENSIVE TECHNIQUE
- It leads to unemployment of people.That is many people lose their employment as machines replaces labour.
- It is a very expensive technique.
- It is very costly.That is to maintain the capital in case of any employment.
- Large scale production may lead into the problem of over production due to lack of a wide market.
LAND INTENSIVE TECHNIQUE
Is the method where more of land is used in production and less of capital eg to increase the form output one decides to expand the form size which using the less of fertilizer.
FACTORS WHICH DETERMINE THE CHOICE OF TECHNIQUE OF PRODUCTION
- Price of factors.
That is, if the factors of production is sold at a lower price producers will use more units of that factor of production and the vice verse.
- Efficiency of the factors.
Producers will choose a factor of production which is more efficient than the other factors. Example; – the use of capital creates more efficiency than labour.
Degree of substituting a factor of production. If a certain factor of production cannot be substituted with other factors of production, producers will have to use more units of that factor e.g. high specialized doctor cannot be substituted