NCERT Solutions for Class 8th Social Science Chapter 7 Factors of Production
Updated on 2026-09-19
About this chapter
Everything you use went through a production process. The resources or inputs used to produce goods and services are called the factors of production . Economics sorts them into four types — land, labour, capital and entrepreneurship . Technology is not a fifth factor but a facilitator : it lets an enterprise produce more goods with the same or fewer inputs. ‘Land’ in economics is much wider than a plot of ground. It covers soil, forests, water, air, sunlight, minerals, oil and natural gas — everything nature gives. A business either buys the land it needs or pays rent to use it for a period of time, as Ratna did for her highway restaurant Pause Point . Labour and human capital are not the same thing. Labour is the physical and mental effort used in production. Human capital is the special
- Chapter opening
- Introduction
- Factors of Production
- Facilitators of human capital
- Social and cultural influences
- Challenges to human capital
- Demographic dividend
- India’s ancient skill heritage
- Capital
- The man who dreamed big for India
Quick revision
| Term | What it means | Where it appears in the chapter | What the book says about it |
|---|---|---|---|
| Factors of production | The resources or inputs used in producing goods and services | Introduction, page 164 | Classified into four types — land, labour, capital and entrepreneurship |
| Business or Enterprise | A firm, a shop, a factory, etc., which produces or sells goods or provides a service | Margin note, page 164 | Enterprises combine various inputs to create goods and services, and so create chances for people to take part in economic activities |
| Land | Not only geographical land but natural resources — soil, forests, water, air, sunlight, minerals, oil, natural gas | ‘Land (natural resources)’, page 166 | Businesses either purchase the land or pay rent to use it for a period of time |
| Labour | The physical and mental effort used in production | ‘Labour (human resources)’, pages 166–167 | Carpenters, farmers, construction workers, teachers and doctors use varying levels of physical strength, knowledge and skill |
| Skill | The ability to do an activity or job well with practice and training | Margin note, page 166 | A police officer, a scientist, a chef — all require a special set of knowledge and skills |
| Human capital | The specialised skills, knowledge, abilities and expertise required to perform labour | ‘People as a resource’, page 167 | Not just the basic efforts of labour but also the quality and efficiency of that labour |
| Training | The process of learning the required skills to do a particular job or activity | Margin note, page 168 | For a civil engineer: observing construction sites, testing materials, understanding safety procedures, hands-on application |
| Kaizen | A Japanese concept meaning ‘continuous improvement’ | ‘Social and cultural influences’, page 169 | Applied in Japan since the mid-1940s; it helped Japan achieve higher standards of living |
| Adult literacy rate | Percentage of people aged 15 and above who can read and write with understanding a short, simple statement about their everyday life | Margin note, page 169 | India, 2023 (World Bank): 85 per cent for males, 70 per cent for females |
| Demographic dividend | The benefit a country gets when it has a large number of young and working people | Page 170 | Economic Survey of India 2024: 65 per cent of Indians are below 35 years |
| Śhilpa śhāstras | Ancient texts with detailed design guidelines on sculptures, paintings, buildings, wooden items and jewellery | ‘India’s ancient skill heritage’, page 171 | Texts on sculpture prescribe exact postures, colours, measurements and proportions |
| Capital | In economics, any asset, whether physical or financial, used to produce goods and services | ‘Capital’, pages 172–173 | Money plus human-made resources — machinery, tools, vehicles, vending carts, computers, shops, factories, office buildings |
| Interest | The amount of money paid by the borrower of a loan to the lender for using their money for a specific time | Margin note, page 173 | Ratna repaid interest along with a part of her loan amount over a period of time |
| Dividend | An amount of money paid regularly by a company to its shareholders out of its profits | Margin note, page 173 | Large companies raise money from the public through the stock market by offering a share of the profits |
| Startup | An entrepreneurial venture with limited resources that aims at rapid growth and expansion while leveraging technology | Margin note, page 174 | An entrepreneur works hard to make their startup idea successful |
| Supply chain | A network of individuals, organisations, resources, activities and technology involved in the production and sale of goods | ‘How are the Factors Connected?’, page 178 | Disruption in it halts production, as during the COVID-19 pandemic |
| Corporate Social Responsibility | Businesses addressing social and environmental concerns in their operations, to benefit society and biodiversity | Page 181 | India was the first nation in the world to bring a CSR law, in 2014 — 2 per cent of the average profits of the last three years |
Exercises
- Chapter opening — The Big Questions Page 163
- Introduction — In-text Questions Page 164
- Introduction — LET’S EXPLORE Page 165
- Factors of Production — LET’S EXPLORE Page 166
- Facilitators of human capital — THINK ABOUT IT Page 168
- Social and cultural influences — LET’S EXPLORE Page 169
- Challenges to human capital — THINK ABOUT IT Page 170
- Demographic dividend — THINK ABOUT IT Page 170
- India’s ancient skill heritage — LET’S EXPLORE Page 172
- Capital — In-text Questions Page 172
- Capital — LET’S EXPLORE Page 173
- The man who dreamed big for India — THINK ABOUT IT Page 175
- Technology: An Enabler of Production — In-text Questions Page 176
- Technology paving the way for accessing knowledge, skills, and job opportunities — LET’S EXPLORE Page 178
- Responsibilities towards Factors of Production — THINK ABOUT IT Page 180
- End of chapter — Questions and activities Page 182–183