FTCE Social Science Practice Test 2026 – Comprehensive Exam Prep

In economic theory, factors of production are resources that are utilized to create goods and services. The primary factors traditionally recognized are land, labor, and capital.

Land refers to all natural resources that are used to produce goods, such as minerals, forests, and water. Labor encompasses the human effort that goes into production, including physical and intellectual contributions. Capital includes the tools, equipment, and facilities used in the production of goods and services, representing human-made resources.

Government is not considered a factor of production because it does not directly contribute to the production of goods and services in the same way the other three factors do. Instead, the government plays a regulatory and facilitative role in the economy, influencing how resources are allocated and helping to create an environment for production through laws, regulations, and infrastructure investment. Therefore, it is not classified among the traditional economic factors of production.