Land
Also called: natural resources · Topic: Factors of Production, Entrepreneurship and Startups · NCERT: Class 8, Ch 7 "Factors of Production"
Meaning
In economics, land is more than the earth's surface. It covers geographical land and all natural resources: soil, forests, water, air, sunlight, minerals, oil and natural gas. Land is a gift of nature, because no one paid to produce it. The economy cannot make more of it, so its total supply is fixed. It cannot be moved, it varies in fertility and location, and it produces nothing until labour and capital work on it. Its reward is rent.
Example
India has about 2.4% of the world's land area but about 18% of its population, so land is a bottleneck for industry. A restaurant owner who leases a site on the highway is using land and pays rent for it.
Don't confuse with
- Capital: capital is made by people, such as machines and buildings, and it wears out. Land is given by nature and its total supply is fixed.