LAND: This is nature`s contribution to production. As a free gift of nature and its reward is rent. Land is a free gift of nature which refers to all those resources that are purely provided by nature but are utilized by man during the production process. It includes all resources not made by man e.g. land, sea, river, animals, minerals resources, crude oil, gold, diamond etc. Land is said to be a passive factor for it is useless without the application of human effort
- Land is a free gift of nature.
- It is geographically immobile.
- It is relatively indestructible.
- It has no production cost.
- It’s quality and value varies with its location.
- It is subject to the law of diminishing returns.
THE LAW OF DIMINISHING RETURNS
This law is also called the law of variable proportions and it states that as more and more units of a variable factor (LABOUR) are applied to one or more fixed factor (LAND), output might initially increase significantly but after a point increasing use of such variable factor will yield less than proportionate returns and output will begin to fall.
This Law is highly applicable to the agricultural and industrial sector of the economy in particular.
Law of Diminishing Returns Table
|Unit of Land
( Fixed factor )
|No of Men
Employed ( Variable factor )
|Total Product||Average Product||Marginal Product|
When one labour is employed to work in one hectare farm, 15 tons of yams are produced. As more and more labour is employed in every successive round of production, the total output continues to increase from 15 to 32 to 54 to72 and so on. But as the seventh (7th) labour is employed, there is a drop in production from 90 t0 84.
In like manner, the MP increases as more labour are employed up to the fourth (4th) labour where the MP drops to 18 from 24 and becomes negative at the seventh (7th) labour.
MERITS OF THE LAW OF DIMINISHING RETURNS
- It helps to enhance proper combination of factors of production.
- It helps the entrepreneur to change the scale of production through the variation of the quantities of all inputs.
- It ensures efficiency, productivity and high profitable level in production process.
- It helps to prevent waste of resources resulting to reduced and minimum cost of production.
- It helps a producer to know when to stop adding more variable factors into fixed factors to obtain maximum outputs.
- Define the law of diminishing returns.
- List five merits of the law of diminishing returns.
IMPORTANCE OF LAND TO ECONOMIC ACTIVITIES
- Agricultural activities providing food for consumption and raw materials for industrial and exports takes place on land.
- It provides areas for forestry and wild life resources.
- It aids production because it is on it that firm, Individual and government built factories , schools, hospitals roads etc.
- Different mineral resource such as crude oil, gold, coal, etc are derived from land.
- Bodies of water such as rivers, lakes and sea which are part of land are used for transportation purposes which aids foreign trade.
- It is the host of other factors of production in bringing about meaningful productive activities.
- What are the economic benefits of land?
- List the agents / factors of production and give their rewards.
- Highlight the basic concept in Economics
- Outline at least five characteristics of science used by economics in its field.
- Why is Economics a science?
- State three career prospect for the study of economics.
- State the branches of Economics.
- Land is a factor of production because it( a) is a free gift of nature( b) contains valuable minerals resources (c) assists in the creation of utility (d) is owned by individuals and governments
- The law of diminishing returns applies to…………….. (a) the average product (b) land as factor of production in the short run only (c) the cultivation of crops only (d) production of essential commodities in the long run
- The only factor of production that is a free gift of nature is…………. (a) capital (b) labour (c) land (d) entrepreneur
- …………… is subject to the law of diminishing returns (a) production (b) land (c) capital (d) labour
- The reward of land is………………(a) interest (b) salary (c) profit (d) rent
- Define land as a factor of production.
- Define the law of variable proportions.
DATA COLLECTION AND PRESENTATION
BASIC ECONOMIC PROBLEMS OF THE SOCIETY