NCERT Textbook: Factors of Production | Social Science Class 8 - New NCERT PDF Download

 Page 1


163
Economic Life Around Us 
7 – Factors of Production
Factors of Production
CHAPTER
7
For a country like India, the largest contribution to growth 
and productivity will probably come about from more 
efficiently using land, labour and capital, thus they must be 
used more efficiently.
    — Bibek Debroy, 
Chairman, Economic Advisory Council 
to the Prime Minister (2017-24)  
1. What are the factors of 
production?
2. How are these factors 
interconnected?
3. What is the role of human 
capital in production, and what 
are its facilitators?
The Big
Questions
Fig. 7.1.
Chapter 7.indd   163 08-07-2025   10:47:09
Page 2


163
Economic Life Around Us 
7 – Factors of Production
Factors of Production
CHAPTER
7
For a country like India, the largest contribution to growth 
and productivity will probably come about from more 
efficiently using land, labour and capital, thus they must be 
used more efficiently.
    — Bibek Debroy, 
Chairman, Economic Advisory Council 
to the Prime Minister (2017-24)  
1. What are the factors of 
production?
2. How are these factors 
interconnected?
3. What is the role of human 
capital in production, and what 
are its facilitators?
The Big
Questions
Fig. 7.1.
Chapter 7.indd   163 08-07-2025   10:47:09
164
Exploring Society: India and Beyond | Grade 8 Part 1
Introduction 
Have you ever wondered how your clothes, shoes, school bag, 
furniture, phone, computer, etc., are made? Every product 
around you goes through a production process before it finally 
reaches you. This production process involves using resources 
or inputs required to produce the final product. The resources 
or inputs used in producing goods and services are hence called 
factors of production. 
Businesses combine various inputs or factors of production to 
create goods and services, which also generate opportunities for 
people to engage in economic activities. 
Business:
A firm, a 
shop, a 
factory, 
etc., which 
produces or 
sells goods 
or provides 
a service.
Meet Ratna, who runs a small restaurant named Pause Point, 
on the city outskirts. Popular among highway travellers for its 
tasty, high-quality food, Pause Point is growing with a team of 
seven people who assist Ratna in managing the business. When 
she started five years ago, she had to choose a location, organise 
money for rent and equipment, hire staff, buy ingredients, and 
plan how to make her dream a success.
Fig. 7.2. A glimpse at the production of some goods
Chapter 7.indd   164 05-07-2025   12:51:58
Page 3


163
Economic Life Around Us 
7 – Factors of Production
Factors of Production
CHAPTER
7
For a country like India, the largest contribution to growth 
and productivity will probably come about from more 
efficiently using land, labour and capital, thus they must be 
used more efficiently.
    — Bibek Debroy, 
Chairman, Economic Advisory Council 
to the Prime Minister (2017-24)  
1. What are the factors of 
production?
2. How are these factors 
interconnected?
3. What is the role of human 
capital in production, and what 
are its facilitators?
The Big
Questions
Fig. 7.1.
Chapter 7.indd   163 08-07-2025   10:47:09
164
Exploring Society: India and Beyond | Grade 8 Part 1
Introduction 
Have you ever wondered how your clothes, shoes, school bag, 
furniture, phone, computer, etc., are made? Every product 
around you goes through a production process before it finally 
reaches you. This production process involves using resources 
or inputs required to produce the final product. The resources 
or inputs used in producing goods and services are hence called 
factors of production. 
Businesses combine various inputs or factors of production to 
create goods and services, which also generate opportunities for 
people to engage in economic activities. 
Business:
A firm, a 
shop, a 
factory, 
etc., which 
produces or 
sells goods 
or provides 
a service.
Meet Ratna, who runs a small restaurant named Pause Point, 
on the city outskirts. Popular among highway travellers for its 
tasty, high-quality food, Pause Point is growing with a team of 
seven people who assist Ratna in managing the business. When 
she started five years ago, she had to choose a location, organise 
money for rent and equipment, hire staff, buy ingredients, and 
plan how to make her dream a success.
Fig. 7.2. A glimpse at the production of some goods
Chapter 7.indd   164 05-07-2025   12:51:58
165
Economic Life Around Us 
7 – Factors of Production
LET’S EXPLORE 
Æ In small groups, study the economic activities around your 
locality. What are the different types of goods and services 
being made or provided? 
Æ Here’s a small report that Latha, Asha, Mohan, and Kiran 
made. You can make your own report for shops of your choice. 
Types of 
shops
Number 
in the 
locality
Goods produced 
or services 
provided
Types of inputs
 required
Grocery 
shops
13
Food grains, 
milk, bread
Packaged goods, 
perishables, 
storage space
Restaurants/
food stalls
8
Cooked meals, 
snacks, beverages
Raw ingredients 
like vegetables and 
fruits, gas, utensils; 
cook/helper
Vegetable 
vendors
15
Fresh vegetables 
and fruits
Fresh produce, 
baskets, weighing 
scale, cart or stall
Mobile 
repair shops
4
Mobile repair, 
mobile 
accessories
Tools, spare parts, 
knowledge and 
skills of mobile 
components and 
functions
Salons/
parlours
3
Haircut, 
grooming, beauty 
services
Scissors, creams, 
beauty products, 
water, electricity
Looking at your group’s report, think about the following:
Æ Where do people get the money that they need for their 
business? 
Æ Where did the hairdresser get trained? 
Æ Who taught the food vendors to cook?
Æ What motivated the business owners to start their business?
Chapter 7.indd   165 05-07-2025   12:51:58
Page 4


163
Economic Life Around Us 
7 – Factors of Production
Factors of Production
CHAPTER
7
For a country like India, the largest contribution to growth 
and productivity will probably come about from more 
efficiently using land, labour and capital, thus they must be 
used more efficiently.
    — Bibek Debroy, 
Chairman, Economic Advisory Council 
to the Prime Minister (2017-24)  
1. What are the factors of 
production?
2. How are these factors 
interconnected?
3. What is the role of human 
capital in production, and what 
are its facilitators?
The Big
Questions
Fig. 7.1.
Chapter 7.indd   163 08-07-2025   10:47:09
164
Exploring Society: India and Beyond | Grade 8 Part 1
Introduction 
Have you ever wondered how your clothes, shoes, school bag, 
furniture, phone, computer, etc., are made? Every product 
around you goes through a production process before it finally 
reaches you. This production process involves using resources 
or inputs required to produce the final product. The resources 
or inputs used in producing goods and services are hence called 
factors of production. 
Businesses combine various inputs or factors of production to 
create goods and services, which also generate opportunities for 
people to engage in economic activities. 
Business:
A firm, a 
shop, a 
factory, 
etc., which 
produces or 
sells goods 
or provides 
a service.
Meet Ratna, who runs a small restaurant named Pause Point, 
on the city outskirts. Popular among highway travellers for its 
tasty, high-quality food, Pause Point is growing with a team of 
seven people who assist Ratna in managing the business. When 
she started five years ago, she had to choose a location, organise 
money for rent and equipment, hire staff, buy ingredients, and 
plan how to make her dream a success.
Fig. 7.2. A glimpse at the production of some goods
Chapter 7.indd   164 05-07-2025   12:51:58
165
Economic Life Around Us 
7 – Factors of Production
LET’S EXPLORE 
Æ In small groups, study the economic activities around your 
locality. What are the different types of goods and services 
being made or provided? 
Æ Here’s a small report that Latha, Asha, Mohan, and Kiran 
made. You can make your own report for shops of your choice. 
Types of 
shops
Number 
in the 
locality
Goods produced 
or services 
provided
Types of inputs
 required
Grocery 
shops
13
Food grains, 
milk, bread
Packaged goods, 
perishables, 
storage space
Restaurants/
food stalls
8
Cooked meals, 
snacks, beverages
Raw ingredients 
like vegetables and 
fruits, gas, utensils; 
cook/helper
Vegetable 
vendors
15
Fresh vegetables 
and fruits
Fresh produce, 
baskets, weighing 
scale, cart or stall
Mobile 
repair shops
4
Mobile repair, 
mobile 
accessories
Tools, spare parts, 
knowledge and 
skills of mobile 
components and 
functions
Salons/
parlours
3
Haircut, 
grooming, beauty 
services
Scissors, creams, 
beauty products, 
water, electricity
Looking at your group’s report, think about the following:
Æ Where do people get the money that they need for their 
business? 
Æ Where did the hairdresser get trained? 
Æ Who taught the food vendors to cook?
Æ What motivated the business owners to start their business?
Chapter 7.indd   165 05-07-2025   12:51:58
166
Exploring Society: India and Beyond | Grade 8 Part 1
In economics, the inputs used in a production process or the 
factors of production are classified into four types — land, 
labour, capital and entrepreneurship. Technology is a facilitator 
and a crucial factor that enables businesses to produce more 
goods with the same or fewer inputs. Let’s learn more about 
these inputs in the sections ahead! 
Factors of Production
Land (natural resources)
The word ‘land’ in economics encompasses not only geographical 
land but also natural resources like soil, forests, water, air, 
sunlight, minerals, oil, and natural gas. Recollect the chapter on 
Natural Resources and Their Use, where we discussed different 
types of resources that nature gifts to us and how we use them. 
Businesses either purchase the required land or pay rent to use 
it for a period of time. 
LET’S EXPLORE
Revisit the table in your report. Which of the items on your 
list can be labelled as ‘land’? 
Labour (human resources)
Labour is essential in production, involving physical and mental 
effort. Carpenters, farmers, construction workers, teachers, 
and doctors use varying levels of physical strength, knowledge, 
and skill. Everyone contributes differently through their work, 
helping create goods and services for society’s needs. 
People as a resource 
Human beings play a key role in economic activities and 
production processes as they apply their knowledge, skills, 
and decision-making abilities to create goods and services. For 
example, a police officer maintains law and order, a scientist 
invents new technologies, a chef develops new recipes, etc. 
They all require a special set of knowledge and skills to perform 
well. Of course, they all must be dedicated to their work to do 
Skill:
The ability 
to do an 
activity 
or job 
well with 
practice 
and 
training.
Chapter 7.indd   166 05-07-2025   12:51:58
Page 5


163
Economic Life Around Us 
7 – Factors of Production
Factors of Production
CHAPTER
7
For a country like India, the largest contribution to growth 
and productivity will probably come about from more 
efficiently using land, labour and capital, thus they must be 
used more efficiently.
    — Bibek Debroy, 
Chairman, Economic Advisory Council 
to the Prime Minister (2017-24)  
1. What are the factors of 
production?
2. How are these factors 
interconnected?
3. What is the role of human 
capital in production, and what 
are its facilitators?
The Big
Questions
Fig. 7.1.
Chapter 7.indd   163 08-07-2025   10:47:09
164
Exploring Society: India and Beyond | Grade 8 Part 1
Introduction 
Have you ever wondered how your clothes, shoes, school bag, 
furniture, phone, computer, etc., are made? Every product 
around you goes through a production process before it finally 
reaches you. This production process involves using resources 
or inputs required to produce the final product. The resources 
or inputs used in producing goods and services are hence called 
factors of production. 
Businesses combine various inputs or factors of production to 
create goods and services, which also generate opportunities for 
people to engage in economic activities. 
Business:
A firm, a 
shop, a 
factory, 
etc., which 
produces or 
sells goods 
or provides 
a service.
Meet Ratna, who runs a small restaurant named Pause Point, 
on the city outskirts. Popular among highway travellers for its 
tasty, high-quality food, Pause Point is growing with a team of 
seven people who assist Ratna in managing the business. When 
she started five years ago, she had to choose a location, organise 
money for rent and equipment, hire staff, buy ingredients, and 
plan how to make her dream a success.
Fig. 7.2. A glimpse at the production of some goods
Chapter 7.indd   164 05-07-2025   12:51:58
165
Economic Life Around Us 
7 – Factors of Production
LET’S EXPLORE 
Æ In small groups, study the economic activities around your 
locality. What are the different types of goods and services 
being made or provided? 
Æ Here’s a small report that Latha, Asha, Mohan, and Kiran 
made. You can make your own report for shops of your choice. 
Types of 
shops
Number 
in the 
locality
Goods produced 
or services 
provided
Types of inputs
 required
Grocery 
shops
13
Food grains, 
milk, bread
Packaged goods, 
perishables, 
storage space
Restaurants/
food stalls
8
Cooked meals, 
snacks, beverages
Raw ingredients 
like vegetables and 
fruits, gas, utensils; 
cook/helper
Vegetable 
vendors
15
Fresh vegetables 
and fruits
Fresh produce, 
baskets, weighing 
scale, cart or stall
Mobile 
repair shops
4
Mobile repair, 
mobile 
accessories
Tools, spare parts, 
knowledge and 
skills of mobile 
components and 
functions
Salons/
parlours
3
Haircut, 
grooming, beauty 
services
Scissors, creams, 
beauty products, 
water, electricity
Looking at your group’s report, think about the following:
Æ Where do people get the money that they need for their 
business? 
Æ Where did the hairdresser get trained? 
Æ Who taught the food vendors to cook?
Æ What motivated the business owners to start their business?
Chapter 7.indd   165 05-07-2025   12:51:58
166
Exploring Society: India and Beyond | Grade 8 Part 1
In economics, the inputs used in a production process or the 
factors of production are classified into four types — land, 
labour, capital and entrepreneurship. Technology is a facilitator 
and a crucial factor that enables businesses to produce more 
goods with the same or fewer inputs. Let’s learn more about 
these inputs in the sections ahead! 
Factors of Production
Land (natural resources)
The word ‘land’ in economics encompasses not only geographical 
land but also natural resources like soil, forests, water, air, 
sunlight, minerals, oil, and natural gas. Recollect the chapter on 
Natural Resources and Their Use, where we discussed different 
types of resources that nature gifts to us and how we use them. 
Businesses either purchase the required land or pay rent to use 
it for a period of time. 
LET’S EXPLORE
Revisit the table in your report. Which of the items on your 
list can be labelled as ‘land’? 
Labour (human resources)
Labour is essential in production, involving physical and mental 
effort. Carpenters, farmers, construction workers, teachers, 
and doctors use varying levels of physical strength, knowledge, 
and skill. Everyone contributes differently through their work, 
helping create goods and services for society’s needs. 
People as a resource 
Human beings play a key role in economic activities and 
production processes as they apply their knowledge, skills, 
and decision-making abilities to create goods and services. For 
example, a police officer maintains law and order, a scientist 
invents new technologies, a chef develops new recipes, etc. 
They all require a special set of knowledge and skills to perform 
well. Of course, they all must be dedicated to their work to do 
Skill:
The ability 
to do an 
activity 
or job 
well with 
practice 
and 
training.
Chapter 7.indd   166 05-07-2025   12:51:58
167
Economic Life Around Us 
7 – Factors of Production
a good job. The word labour refers to the physical and mental 
effort used in production. However, human capital refers to the 
specialised skills, knowledge, abilities and expertise required to 
perform that labour. Thus, human capital is not just the basic 
efforts of labour but also the quality and efficiency of that labour.
Facilitators of human capital
Education and training
Education helps individuals gain knowledge, starting with basic 
literacy and extending to expertise in specific fields. What you 
Fig. 7.5. Carpenter Fig. 7.6. Software developer
Fig. 7.3. Worker at a tea plantation Fig. 7.4. Chemical engineer
Chapter 7.indd   167 05-07-2025   12:52:00