Factors of production

Factors of production are the things that businesses need to create products or services. It's like the ingredients you need to make a cake - you need flour, eggs, sugar and butter. These are the factors of production for baking a cake.

Businesses use factors of production too. They need different things to help them make and sell products or services. The factors of production are land (like the raw materials that are found in the ground), labor (like the people who work in the business), capital (like the money and equipment the business uses to make things), and entrepreneurship (like the people who own or manage the business).