What Cannot Be a Factor of Production?

Subject: Economics
Pages: 2
Words: 295
Reading time:
< 1 min

A factor of production in economics is a resource that is used in the process of production of goods and services. There are various factors of production, namely, land, labor, entrepreneurship, and capital. Goods and services cannot be factors of production in business as they represent the eventual result of the process rather than a resource that is needed for manufacturing.


There are four main categories of factors of production according to the traditional economic theory. Land as a factor includes not only the utilization of land for agricultural purposes but also all the natural resources that come from the land or were planted there. The labor factor implies the efforts and work performed by people in order to create goods and services.

Using labor factors only is not enough as the production capital factor is also important. It implies the material items that are bought and used by individuals in the process of manufacturing. For instance, an oil pump machine purchased by an engineering company for oil production can be considered a capital factor. However, money is not a factor of production as it cannot be used directly for the manufacturing of goods even though it is necessary for buying items needed for production.

Entrepreneurship is a factor that integrates all the other mentioned factors in order to ensure its proper utilization and the effectiveness of the production of goods and services. It includes proper management, the implementation of modern technologies, the performance of recruitment, and more. Therefore, all the mentioned factors are used in order to produce goods and services. Neither goods nor services can be factors of productions. Any other resources that do not take part in manufacturing directly, including money, are not factors of production either.