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In economics, factors of production (or productive inputs) are the resources employed to produce goods and services. Here the rate of output is modeled as a function of the rate of use of each input employed.[1][2] The first factor of production is the time of the entrepreneur, which, when combined with other factors, determines the rate of output for a particular good or service and the cost to the entrepreneur of various rates of supply. The choice by the entrepreneur of the rate and volume of the good or service to supply is determined by the extent of the market. Adam Smith When producing in autarky, the extent of the market is the demand by the entrepreneur himself. As additional individuals enter the economy, the market may widen. But, in addition, competitive suppliers might also enter. It is this dynamic system that determines the production of the good or service, and the returns to the relevant factors of production. Classification of factors can include such broad aggregates as labor, land, capital, the overall state of technology,[3] and entrepreneurship. The number and definition of factors can vary, depending on theoretical purpose, empirical emphasis, or school of economics.[4]
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