Profit is the reward for successful conduct of business.Welcome to EconomicsDiscussion.net! So is land, as a factor of production, ‘really distinct’ from capital.Another important feature of land is that it is not homogeneous. However, as wages continue to rise a stage ultimately comes when higher wages (incomes) make leisure more attractive.When incomes are relatively high, therefore, higher wage rates may actually lead to a fall in the number of hours worked (and, thus, in the amount of labour offered by an individual worker.) Some of the land, for example, in hill area, of say, Shillong, or Darjeeling, has an extremely limited degree of occupational mobility, being useful perhaps for sheep grazing, golf course or as a centre of tourism.The income received by the owner of land is known as rent. But before we proceed further we may make a passing reference to factor mobility.In economics the term land is used in a broad sense to refer to all natural resources or gifts of nature.

The essential characteristics of the business firm is that it purchases factors of production such as land, labour, capital, intermediate goods, and raw material from households and other business firms and transforms those resources into different goods or services which it sells to its customers, other business firms and various units of the government as also to foreign countries.“Production is the organised activity of transforming resources into finished products in the form of goods and services; the objective of production is to satisfy the demand for such transformed resources”.“Production is any activity directed to the satisfaction of other peoples’ wants through exchange”. natural resources) describes all naturally-occurring resources (e.g. Examples of such capital equipment are electric motors, machine tools, hand tools, typewriters, and lorries. Moreover, he is to decide the scale of production and the proportion in which he combines the different factors he employs. These factors are classified also as management, machines, materials, and money (this, the 4 Ms), or other such nomenclature. But if he goes out for a joy ride in his motor car, he is using it as a consumption good. At that stage capital goods consisted of simple tools and implements. The entrepreneur under­takes both these risks in production.Another distinguishing function of the entrepreneur as emphasised by Schumpeter, is to make frequent inventions- invention of new products, of new techniques and discovering new markets—to improve his competitive position, and to increase earnings.The above description indicates the supreme position of the entrepreneur in production. Normally, when wages are relatively low, increases in wages will tend to lead to an increase in the supply of labour.

An entrepreneur is to determine what to produce, how to produce, where to produce, how much to produce, how to sell and so forth. Even if income is high savings will be low in the absence of the above-mentioned savings institutions. It might be used for farmland, roads, rail­ways, airlines, public parks, playgrounds, resi­dential housing, office buildings, shopping complex, and so on. In brief, he is to make vital business decisions relating to the purchase of productive factors and to the sales of the finished goods or services.Earlier writers used to consider management control one of the chief functions of the entrepreneur.

This definition makes it clear that, in economics, we do not treat the mere making of things as production. But the basic functions of the entrepreneur-organisation, management and risk-taking are the same in all industries.Whatever the nature, duration and extent of economic activity and entrepreneur has to raise capital to organise the factors of production, and take certain fundamental decisions on what, how and where to produce. The economic inputs used to make a profit are called factors of production. All grades (plots) of land are not equally productive or fertile. The supplier of labour—the worker—is also a consumer.

If a business­man is asked, “What is your capital?” he will always mention a sum of money. Each such equipment can only be used for a specific purpose. This is particularly true in the capitalistic or even mixed economy which is based on the price-profit system.

But this is not the whole truth. In fact, these services are supplied to the firms in all types of industry and directly to consumers. But enterprise is a separate factor because the first three factors are substitutable to some extent, but the fourth factor is a specific factor and cannot be substituted by any other factor.Enterprise seems to be the most mobile of all the four factors.