This lesson will cover the basic governing principles of economic thinking including the key economic questions, factors of production, efficiency and the market structure. 

Factors of Production

As the term implies, the issues relating to factors of production relate to the production process side of a farmer’s practices as a firm. There are four traditional factors (land, labour, capital and entrepreneurs).

Land / Natural Resources

This first factor is defined as land resources and includes all natural resources on the ground (such as vegetation, animals, insects, soil, water etc.), those underground (such as minerals, rocks, soil, water, etc.) and those above ground (such as air, clouds, air space and also climate). Issues that impact on this factor of production can include land size, distribution, influence of culture on land uses, etc. Competition between farming activities and urbanization is another contentious issue. Value addition per acre/hectre (or plot size) increases as the urban areas spread into rural areas because the value for urban uses of similar land is higher. While competition for land is economic, it can lead to political competition and therefore conflicts.