Tag: natural resources- air, water and land

Capital is the fundamental factor that affects the productivity of land as for production capital is needed.For example, for cultivating the land proper HYV seeds,agricultural facilities,etc is needed- to facilitate all these capital is of extreme significance.

Water resources close to farm lands is essential for better productivity due to better irrigation. This s especially important in under developed and developing countries as they lack infrastructure for proper irrigation facilities. 

Calculation of average productivity of land helps us to understand the per unit land productivity, which helps us to know the ability of a production system to produce more effectively and efficiently.

Land is one of the four basic factors of production. 

Land alone is of no use without human resource or efficient and effective labour resource. An efficient production mechanism is established with the proper coordination between land and labour, where in the labour makes use of the land to produce output.

The reward for land is rent. Thus if the land is not owned by the entrepreneur the owner of the land must be compensated for its usage and thus the entrepreneur pays rent. 

This happens due to negative marginal returns for eg , in case of excessive employment in a particular land. At this point withdrawal of workers will help to increase the total output.

Land is a free gift of nature to the human beings hence the supply of land is fixed,it requires labours and capital to be useful in order to make some production to the economy, it does not possess an mobilty,ie, it cannot be moved from one place to another.