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(a) Explain any three factors that affect productivity of land. State two characteristics of land that make it different from other factors of production.

(b) Define Human Capital.

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(a) Factors Affecting Productivity of Land: 

1. Fertility of Land: The productivity of land is determined by its natural qualities and its fertility. A flat and levelled land is comparatively more productive than an undulating one The rich soil is more fertile and productive. 

2. Proper Use of Land: The productivity of land’ is directly related to its proper utilization. For example, a piece of land situated in the heart of city is more suitable for construction of a house or a market place. If this piece of ‘land’ is put for farming or agricultural use, its productivity will almost be negligible. 

3. Location of Land: The location of ‘land’ affects its productivity to a great extent. For example, the location of land near the market or bus station will result in economy of transportation charges and overall productivity from this point of view will naturally be higher. 

4. Improvements done on Land: The permanent improvement done on land, like construction of irrigation channels, hedging of fields or the construction of dams, etc., have positive effects on productivity of land. 

Two main characteristics of land which distinguish it from other factors of production: 

1. Land is Immobile: Land cannot physically move from one place to another whereas capital, labour and entrepreneur are all mobile factors of production. 

2. Effect of Laws of Returns: Since land is a fixed factor of production, the laws of returns are more effectively applicable on it. Use of capital and labour etc can be varied overtime. 

(b) Human Capital: Those hidden qualities in a person which earn him an income and cannot be transferred from one place to another is called human capital

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