The production of goods and services requires the use of various production factors. The quantity of production depends on the supply of various factors of national income generation and their productivity. Since economic growth occurs in the total production expansion, therefore the production and efficiency of factors is important for the process of economic development.

(i) Land : The term ‘land’ has been given a special meaning in economics. It does not mean soil, as in the ordinary speech, but it is used in a much wider sense. Land stands for all natural resources which are useful and scarce, actually or potentially. Land is an inactive means of production. Land includes all things obtained free of cost from nature, i.e. land, oceans, mountains, etc. Land is limited and it is a necessary and fundamental means of production. Its fertility varies.

(ii) Labour : Any work whether manual or mental which is done in exchange for some reward is called Labour. So, in terms of economics, professors, teachers, doctors and singers are as much labourers as the ordinary workers. Therefore, the essential condition for a work to be called Labour is that it should be done for a payment or monetary consideration.

It is a perishable factor and it cannot be possible to store the labour for future utilization. If the person or worker does not get employment for some days, then the time so lost cannot be recovered.

(iii) Capital : Capital implies that property which is used to earn money. E.g. raw material, building, machines, equipment, etc.

(iv) Management and Technology : Management and technology or organisation is also an important means of production. With its help, various means of production are arranged in appropriate quantity and coordination is established between them. Now-a-days production is done on very large scale, due to which the importance of this factor has increased greatly.

(v) Entrepreneurship : The entrepreneur owns entrepreneurship. He is that man of production who takes decisions and bears risk. He has also been called the Organizer, the Manager or Risk-taker. The first and foremost function of an entrepreneur is to start a business by collecting various factors of production. Entrepreneur pays remuneration for the various factors of production, remuneration for their services. Whatever surplus is left, is his factor payment. If there is no surplus left, he gets no factor payment.