What are d factors of production?

Answer 1

The factors of production are typically divided into 3 groups:

Companies, including government

The Market

Consumers

Companies produce goods, which are sent to the market. Consumers go to the market and buy the goods. The money from the purchases are stored in banks. The banks, under the government, pay the companies enough so that they maximize profits. The company uses the money to make more products. The cycle then repeats.

If there is no demand for a product, the consumers are excluded from the cycle, and thus the companies go out of business.

If the companies cant make money, they will make no goods. The company and the sellers of their product (if specialized, such as a bike store) will go out of business and suffer money losses.

The bank, however, is unaffected, since they are not involved in the buying or selling of the goods.

Increase in demand = increase in supply, and vice versa. This is never met 100%, which is why everyone is not rich, nor has anything and everything they want.

This entire concept is the most important problem in economics today - Scarcity.