NCERT Solutions Class 8 Social Science Chapter 7 Factors of Production

F R E E S T U D Y M AT E R I A L F O R E V E R Y S T U D E N T

CLASS 8 · SOCIAL SCIENCE

NCERT Solutions

Chapter 7: Factors of Production

NCERT Textbook — Exploring Society: India And Beyond

BOOK PAGES SECTIONS QUESTIONS MEDIUM

163 – 183 16 39 English

Solutions, notes, sample papers & more at 53 pages

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

CLASS 8 · SOCIAL SCIENCE · EXPLORING SOCIETY: INDIA AND BEYOND

NCERT Solutions — Chapter 7: Factors of Production
Complete NCERT Solutions for Class 8 Social Science Chapter 7 Factors of Production, from Exploring Society:
India and Beyond, Grade 8 Part 1 (theme: Economic Life Around Us). Every question in the chapter is answered
— The Big Questions, all six LET’S EXPLORE boxes, all five THINK ABOUT IT boxes, the three in-text
questions and all ten Questions and activities — with the shop survey table on page 165 and the mobile-
phone assembly flow chart (Fig. 7.23) read directly off the printed page.

TEXTBOOK BOOK PAGES

Exploring Society: India and Beyond (Class 8) 163 – 183

SECTIONS QUESTIONS

16 39

MEDIUM

English

The Big Questions — Page 163
Chapter opening — theme: Economic Life Around Us

THE BIG QUESTIONS

Q1 What are the factors of production?

The factors of production are the resources or inputs used in producing goods and services.
Every product around you — your shoes, your school bag, the phone in the house — goes
through a production process, and that process consumes inputs. In economics those inputs
are classified into four types: land, labour, capital and entrepreneurship. Technology is
added as a facilitator — a crucial one, because it enables enterprises to produce more goods
with the same or fewer inputs.

Page 1 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

FACTOR WHAT THE BOOK INCLUDES IN IT EXAMPLE FROM THIS CHAPTER

Land Not only geographical land, but soil, forests, Ratna took a plot on lease for Pause
(natural resources) water, air, sunlight, minerals, oil and natural Point; a salon needs water and electricity;
gas a vegetable vendor needs produce grown
on soil

Labour The physical and mental effort used in The cook and helper in a food stall;
(human resources) production carpenters, farmers, construction
workers, teachers, doctors

Capital Money plus human-made resources — Ratna’s furniture and kitchen
machinery, tools, equipment, vehicles, equipment; a vendor’s weighing scale,
vending carts, computers, shops, factories, basket and cart
office buildings

Entrepreneurship Starting an enterprise or creating something Ratna herself, who chose the location,
new to solve a problem — taking the risk and arranged money, hired staff and planned
gathering the other factors the business

Technology The application of scientific knowledge UPI payments, GPS routing, drones
(facilitator, not a spraying fertiliser, robots assisting in
factor) surgery

LAND

LABOUR

The enterprise GOODS AND
CAPITAL combines them SERVICES
in a chosen proportion

ENTREPRENEURSHIP

TECHNOLOGY — a facilitator that runs through every stage
it lets the same or fewer inputs produce more goods

The four factors of production feed into the enterprise, which combines them to make goods and
services. Technology is drawn as a band underneath because it is not a fifth input — it changes how
efficiently the other four work.

Page 2 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Why we bother to classify them: because a producer has to answer a practical
question — what exactly must I arrange before I can make anything? Ratna, when she
started Pause Point five years ago, had to choose a location (land), organise money
for rent and equipment (capital), hire staff (labour), buy ingredients, and plan how to
make her dream a success (entrepreneurship). Four different arrangements, four
different markets to go to, four different kinds of payment. The classification is a
checklist, not a piece of theory.

Tip: the quick test for sorting an input is to ask where did it come from? If nature
made it, it is land. If a person’s effort supplies it, it is labour. If people made it earlier
and it is now being used to make something else, it is capital. If it is the decision to
bring all of these together and carry the risk, it is entrepreneurship.

Q2 How are these factors interconnected?

They are interconnected in the sense that no factor produces anything on its own — they
complement each other, and they are combined in a proportion that depends on the product. As
the chapter puts it, if some factors are missing or misused, production can become inefficient
or can be halted.
1. The proportion changes with the product. Output from the agriculture, construction and
handicraft sectors relies more on labour, and is therefore called labour-intensive.
Semiconductor chips or satellites need more capital and specialised machinery, and are capital-
intensive.

PRODUCT WHICH FACTOR WHAT THE OTHER FACTORS STILL DO
DOMINATES

Handloom saree, a handicraft, Labour — labour- Land supplies cotton and dyes; capital supplies the
a building under construction intensive loom; the weaver’s enterprise decides the design

Semiconductor chip, a satellite Capital — capital- Very few but very highly skilled workers; ultra-
intensive pure silicon, water and power from land; huge
entrepreneurial risk

2. A new technique can change the proportion itself. Increased machine use in agriculture
can lower dependence on labour. In the other direction, 3-D printing can help revive dying art
forms in textiles by producing handloom products on a large scale to serve the market — so
technology does not always push labour out; sometimes it gives a craft a market again.

Page 3 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

3. The factors are also connected across geography. The production inputs are available at
co m
se
different geographic locations. An enterprise procures them from those varied locations and
m.
c o m l a
g organisations,
combines them. This geographic interconnectedness gives businesses access to varied inputs
— but it also.creates a
m
se activities and technology involved in producing and selling goods. When a disruption
a weakness. The supply chain is the network of individuals,

l a
ag because a firm relied on far-off sources instead of local inputs, production halts — as
resources,
occurs

m
was the case during the COVID-19 pandemic.

. co ag
m
4. Follow one real product and you can see all of this at once. India is the world’s second-

ase
l
largest mobile phone manufacturer after China in 2025, and Fig. 7.23 traces how a phone is
made: a g

co m
The process of mobile phone assembly (Fig. 7.23)
e m.
sAssemble
m l a
.co ag
sem
R&D team Acquire land and components
Acquire raw materials

gla
conceptualises set up factory & install software
new features

a
m a s
m .co agl
se
Distribution to Mass production Test phone (functionality,
END

l a
retail stores & packaging quality & performance)

a g
m
Blue stages lean on LABOUR and human capital · green on LAND · orange on CAPITAL
The ENTREPRENEUR runs the whole chain and decides how resources are used;
. co
em
as
TECHNOLOGY is present at every single stage.

m l
.co a g
a s em The mobile-phone flow chart from page 179, with the factor that dominates each stage marked.

ag l Remove any one colour and the chain breaks.

se m
c o m g l a
m. is involved at every stage — teams of software, a
Why interconnection matters more than the list: because the four factors are not
four separate stories. Humanse
la
effort
agengineers
electrical and mechanical with project managers develop the product; the
entrepreneur decides how resources should be used; and procuring land, factory

. c om
space, machinery and skilled workers all needs financial resources. As the chapter

s e m missing is not a
says, the inputs work like puzzle pieces — a puzzle with a piece

. om smaller picture, it is a broken one.
cslightly a gla
as em
agl c
m .
m a s e
e m . co agl
g l as
a

co m
m .
m as e
.co


a g l Page 4 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Q3 What is the role of human capital in production, and what are its facilitators?

Human capital is what turns effort into good work. The chapter draws the line carefully:
labour is the physical and mental effort used in production, while human capital is the
specialised skills, knowledge, abilities and expertise required to perform that labour. So human
capital is not just the basic efforts of labour but also the quality and efficiency of that
labour.
Its role in production is that human beings apply their knowledge, skills and decision-making
abilities to create goods and services. A police officer maintains law and order; a scientist
invents new technologies; a chef develops new recipes. Each needs a special set of knowledge
and skills — and dedication to the work — to perform well. Without that, the same land, the
same machines and the same money would produce far less.

FACILITATOR HOW IT BUILDS HUMAN THE BOOK’S EVIDENCE
CAPITAL

Education and Education gives knowledge, from A civil engineering student learns principles of design
training basic literacy up to expertise in a and materials, then trains by observing construction
field; training gives the hands-on sites, testing materials and understanding safety
skill to apply it procedures — so as to build roads and bridges that
are durable, cost-efficient and eco-friendly

Healthcare Good health supports cognitive They can do more in shorter time periods, be
development, so children attend creative, and do not have to be away from work due
school regularly and learn better; to ill health
healthy workers give their best
physically and mentally

Social and A culture of hard work, continuous Japan’s kaizen — ‘continuous improvement’ —
cultural improvement and doing things well applied since the mid-1940s, helping Japan reach
influences raises the quality of a whole higher standards of living; the German work ethic,
workforce valuing punctuality, attention to detail and quality,
behind Germany’s lead in technology and
manufacturing

Technology Removes the geographical barrier SWAYAM offers free MOOC courses from Grade 9
to learning and to finding work onwards in subjects like robotics, aquaculture and
textile printing; the National Career Service portal
lists jobs from plumbing to accounting

Where India stands. Literacy is an important characteristic of the population and helps
enhance the skills and productivity of human capital. On World Bank estimates for 2023, India’s
adult literacy rate is 85 per cent for males and 70 per cent for females — a gap of 15
percentage points, and a reminder that the second figure is where the largest gain is still

Page 5 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

available. The Economic Survey of India 2024 says 65 per cent of people in India are below the
age of 35, which means roughly 35 per cent are 35 or above. That young, productive
population may give India a demographic dividend — the benefit a country gets when it has
many young and working people, and fewer dependants.

Why the dividend is not automatic: a large young population is only a potential.
The chapter states the condition plainly — to take advantage of this potential,
individuals must have access to quality education, health, training and skilling.
Numbers alone do not produce anything; human capital does. That is exactly why a
dropout like Harsh on page 170 is not only his own loss but the country’s.

In-text Questions — Page 164
Introduction

Q1 Have you ever wondered how your clothes, shoes, school bag, furniture, phone,
computer, etc., are made?

Yes — and the answer is the same for all of them: every product goes through a production
process before it finally reaches you, and that process uses resources or inputs. Those inputs
are what this chapter calls the factors of production.
Take the school bag on your shoulder and take it apart, input by input:

FACTOR WHAT WENT INTO THE SCHOOL BAG

Land Cotton grown in soil under sunlight and water, or polyester made from oil; dyes from minerals;
the water and electricity used by the factory; the plot the factory stands on

Labour The designer who drew the pattern, the cutter, the tailors who stitched it, the quality checker, the
packer, the truck driver, the shopkeeper who sold it to you

Capital The sewing machines, cutting tables, the factory shed, the delivery van, the shop — and the
money that bought them all

Entrepreneurship Somebody decided that school children needed a stronger, lighter bag, took the risk of making a
few thousand of them, and gathered everything above

Technology The machine that seals the zip, the software that plans the cutting so that less cloth is wasted,
the UPI payment you made at the shop

Page 6 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Try this: do the same exercise with your shoes and with a phone. You will notice
something interesting — a phone needs far more capital and far fewer pairs of
hands per unit than a school bag does. That difference is exactly what the chapter
later calls labour-intensive and capital-intensive production.

LET’S EXPLORE — Page 165
Introduction — the group report on shops in the locality

LET'S EXPLORE

Q1 In small groups, study the economic activities around your locality. What are the
different types of goods and services being made or provided?

Method first. Walk one fixed stretch — a market road, a lane, or the shops around your school
— with your group, and record what you see rather than what you remember. For each
establishment write down four things: what it is called, how many of that type you counted, what it
produces or provides, and what it needs in order to do that. Those four columns are exactly the
columns of the book’s table.
The key idea to test as you walk: separate goods — physical things you can hand over, like
bread, vegetables, a repaired phone case — from services — work done for you that you cannot
carry away, like a haircut, a bus ride, tuition, a phone repair.

ACTIVITY IN THE LOCALITY GOODS PRODUCED SERVICES PROVIDED

Bakery, sweet shop, flour mill Bread, biscuits, sweets, Home delivery, orders for functions
ground flour

Tailor, cobbler, carpenter Stitched clothes, furniture Alterations, shoe repair, fittings at
your house

Chemist, clinic, diagnostic lab Medicines sold Consultation, tests, dressing a wound

Auto and e-rickshaw stand, courier, — Transport, delivery, recharge and bill
mobile recharge shop payment

Tuition centre, cyber café, bank Printouts, photocopies Teaching, internet access, savings and
branch, salon loans, grooming

Page 7 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Sample answer: “In our 500-metre stretch we counted 41 establishments. Goods
being made or sold included bread and biscuits, cooked meals, vegetables, stitched
shirts and wooden stools. Services included haircuts, mobile repair, tuition, tailoring
alterations, photocopying, auto rides and banking. We noticed that services
outnumbered goods almost two to one, and that every service shop still needed
some goods as inputs — the barber needs scissors and creams, the tuition centre
needs a room, a board and electricity.”

Why this exercise comes first in the chapter: because the four factors are easier
to believe when you have counted them. By the time you finish the walk you will
have seen, without being told, that every single shop needed a place (land),
somebody’s effort and skill (labour), some equipment and money (capital), and
somebody who decided to start it (entrepreneurship).

Q2 Here’s a small report that Latha, Asha, Mohan, and Kiran made. You can make your
own report for shops of your choice.

This is the model your group report should copy. Here is the report exactly as it is printed on
page 165, and then what it is worth noticing in it.

TYPES OF NUMBER IN GOODS PRODUCED TYPES OF INPUTS
SHOPS THE LOCALITY OR SERVICES REQUIRED
PROVIDED

Grocery shops 13 Food grains, milk, bread Packaged goods, perishables,
storage space

Restaurants/food 8 Cooked meals, snacks, Raw ingredients like vegetables
stalls beverages and fruits, gas, utensils;
cook/helper

Vegetable vendors 15 Fresh vegetables and fruits Fresh produce, baskets,
weighing scale, cart or stall

Mobile repair 4 Mobile repair, mobile Tools, spare parts, knowledge
shops accessories and skills to handle mobile
components and functions

Salons/parlours 3 Haircut, grooming, beauty Scissors, creams, beauty
services products, water, electricity

Page 8 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

co m
e m.
Total establishments counted
m l as
.co
= 13 + 8 + 15 + 4 + 3
m a g
l a se
g
= 43 shops
a
om
Three things this report shows.

The commonest shop needs the least m
e
. c ag
s
capital. Vegetable vendors are the largest group (15

a g la are a basket, a weighing scale and a cart or stall — the
of 43, a little over a third). Their inputs
cheapest set on the list. Mobile repair shops, needing tools, spare parts and specialised

m
knowledge, are only 4.
co
m.
Every row already contains all four factors. Storage space and water are land; the

o m l a se
cook/helper and the repairer’s skill are labour and human capital; the weighing scale,
.c cart and scissors are capital; the shopkeeper who started
a geach one is the
se m
utensils,

g l aentrepreneur.
a One shop’s output is another shop’s input. The vegetable vendor’s fresh produce is listed

s
as an input for the restaurants. This is the beginning of the idea of a supply chain, which the
m a
.co agl
chapter defines on page 178.

a s em
aglmake your own report, count over one fixed stretch
Check it yourself: when you
and one fixed day, and write the number even when it is 1 or 0. A count of 0 mobile

co m
.
repair shops in a village lane is a real finding, not a blank.

e m
m l as
.co a g
a s em Where do people get the money that they need for their business?
a gl Q3

se m
com g l a
.

m a
ase
They start with their own money and the people closest to them, and borrow the rest. The

agl
chapter sets out three sources, in the order a business usually reaches for them.

1. Personal savings, family and friends. Generally the first source of funds and support for
individuals when they start a business — this is what Ratna did.
. c om
m a s em to start Pause Point, so
2. A bank loan for the shortfall. The funds were insufficient for Ratna

. cshe a gal part of her loan amount over a
o took a loan from the bank. She paid interest along with
a s em period of time. Interest is what a borrower pays the lender for using their money for a
agl specific time.
c
m .
e
3. The stock market, for large companies. Big businesses need a lot of money to expand, so

m a s
co agl
they raise it from the general public by selling shares of the business in the stock market —

m .
e
a special type of market where shares are bought and sold — and offer buyers a share of the
profits, called a dividend.
g l as
a

co m
m .
m ase
.co


a g l Page 9 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

A small example of a loan

Loan taken = ₹2,00,000 at 12% per year

Interest for one year = 12% of 2,00,000
= (12 ÷ 100) × 2,00,000

= ₹24,000

A small example of a dividend

Shares held by the public = 10,00,000

Dividend declared = ₹3 per share

Total paid out = 10,00,000 × 3 = ₹30,00,000 (₹30 lakh)

Why the order matters: each step costs more and demands more. Savings cost
nothing but are limited. A loan is larger but must be repaid on time with interest
whether or not the business does well. Selling shares brings in the most money but
means giving strangers a permanent claim on your profits. That is why a roadside
stall runs on savings and a petrochemical plant runs on the stock market — the size
of the capital needed decides where you must go for it.

Q4 Where did the hairdresser get trained?

Almost never in a classroom alone — through practice beside someone who already had
the skill. The chapter’s own definition explains why: a skill is “the ability to do an activity or job
well with practice and training”, and training is “the process of learning the required skills to
do a particular job or activity”.
The usual routes, any of which a real hairdresser might name:

Apprenticeship in an existing salon — starting as a helper who washes hair and sweeps,
watching the senior stylist for a year or two, then being allowed to cut.
Family transmission — learning from a parent or uncle who runs the shop. The chapter
notes this pattern for India generally: knowledge was passed on from generation to
generation, and also built on.
A short course at a beauty and wellness training institute, an ITI, or a skill-development
programme, followed by supervised practice.

Page 10 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Free online courses of the kind SWAYAM offers, which the chapter mentions as technology
opening access to skill development.

Why this question is in an economics chapter: because it separates labour from
human capital. Two people can stand at the same chair for the same eight hours —
that is the same labour. The one who trained can give a good haircut in twenty
minutes and keeps customers coming back; that difference is human capital, the
quality and efficiency of the labour. And notice where it came from: not from the
salon’s capital, but from time spent learning.

Q5 Who taught the food vendors to cook?

Usually the family kitchen first, then years of working in someone else’s. Food vendors
mostly learn the way skills have long been passed on in India — by watching, helping and
repeating, rather than from a written recipe.

At home, from a mother, father or grandparent — which is why a stall’s speciality is so often
a family dish from a particular region.
As a helper in another food stall or dhaba, chopping and washing for a year before being
trusted with the tawa. Notice that the book’s own table lists “cook/helper” as an input for
restaurants — the helper is a cook being trained.
From a formal course — a catering or hotel-management institute, or a food-processing
skill course — which is the route a chef in a hotel is more likely to have taken. The chapter
says a chef develops new recipes and requires a special set of knowledge and skills.

Did you know? The chapter describes exactly this kind of transmission when it says
knowledge in ancient India “was passed on from generation to generation, and also
built on”. A vendor’s chutney recipe is a small living example of the same process —
inherited, then changed to suit the customers who actually stop at that stall.

Q6 What motivated the business owners to start their business?

Different owners, but the motives fall into four groups — and the chapter names most of
them when it describes an entrepreneur.

Page 11 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

MOTIVE WHAT IT SOUNDS LIKE THE CHAPTER’S WORDS FOR IT
WHEN AN OWNER
SAYS IT

Solving a problem “There was nowhere on this An entrepreneur “identifies a problem and is
highway to get a clean, hot resolute to solve it with an innovative solution”
meal.”

Livelihood and “I lost my job” or “the land at Enterprises “generate opportunities for people to
income home could not feed all of us.” engage in economic activities”

Independence and “I did not want to work under Entrepreneurship means “starting your own
family tradition anyone” · “my father ran this enterprise”
shop.”

Satisfaction and “People come back and tell me Entrepreneurs “derive a deep sense of satisfaction
service the food tasted like home.” from seeing their dreams become a reality and
serving the people”

Ratna is the chapter’s own case. She had a dream, chose a spot on the city outskirts where
highway travellers would stop, and planned how to make it a success. Five years later Pause
Point is known for tasty, high-quality food and employs seven people — so her single decision
also created seven livelihoods.

Why profit alone is a poor explanation: if money were the only motive, nobody
would start a business at all — a loan carries a fixed interest cost while the earnings
of a new shop are uncertain. What makes someone accept that gamble is a belief
that they can solve a problem better than it is being solved now. That belief is the
real starting capital of a business.

LET’S EXPLORE — Page 166
Factors of Production — Land (natural resources)

LET'S EXPLORE

Q1 Revisit the table in your report. Which of the items on your list can be labelled as
‘land’?

Anything on the list that nature supplied, not people. Remember the chapter’s wide
definition: in economics ‘land’ covers not only geographical land but soil, forests, water, air,
sunlight, minerals, oil and natural gas. Go down the table on page 165 and apply that test.

Page 12 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

ITEM IN THE REPORT LAND? REASON

Perishables; fresh produce; fresh Yes — land- All of it is grown in soil, with water and sunlight, or
vegetables and fruits; raw ingredients based comes from animals reared on land
like vegetables and fruits; food grains,
milk

Storage space; the shop premises; the Yes, for the The site is land; the building put up on it is capital.
pitch on which the cart or stall stands plot Rent paid for a shop is really payment for both
together

Gas (cooking gas) Yes Natural gas and petroleum are named in the chapter
as natural resources

Water Yes Named directly in the definition of land

Electricity Partly The current itself is produced by people, but its
source is a natural resource — coal, water in a dam,
or sunlight. The honest answer is that it is a
produced input made from land

Baskets, weighing scale, cart or stall, No — capital Human-made resources used to produce goods and
utensils, scissors, tools, spare parts, services
computers

Cook/helper; knowledge and skills to No — labour Effort, and the skill behind the effort
handle mobile components and human
capital

Packaged goods, creams, beauty No — capital They were made in some other factory, from land-
products (bought stock) based raw materials, before this shop bought them

Why some rows are genuinely hard: because most inputs are natural resources
that have already passed through somebody’s hands. A tomato in the field is land;
the same tomato in a crate on a truck already contains labour, a vehicle and fuel.
Economists solve this by asking what is being paid for at the margin — you pay rent
for a site because nobody produced it, but you pay a price for a crate because
somebody did. Do not be embarrassed if this took some arguing in your group; end-
of-chapter Question 1 asks you exactly what difficulties you faced.

Tip: a quick sorting rule that works for almost every row — could it exist if no human
being had ever lived? Soil, water, sunlight, gas: yes. Weighing scale, cream, spare part:
no.

Page 13 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

co m
m.
THINK ABOUT IT — Page 168
m as e
.co
Facilitators of human capital — Healthcare
a g l
se m
l a
THINK ABOUT IT

a g
How do infrastructure and healthcare systems like hospitals, primary healthcare
m
Q1

. co
centres, doctors, pharmacies, diagnostic labs, etc., contribute to developing human
ag
e m
as
capital?

a g l

. c om
They protect the two things human capital is built out of — learning time and working

m a s em development,
time. The chapter’s argument runs in two steps: good health supports cognitive

. co
which lets children
a gl workers give their best
attend school regularly and learn better; and healthy

a s em and mentally, doing more in shorter time periods, being creative, and not having to
physically

a gbel away from work due to ill health.
m a s
.co agl
PART OF THE SYSTEM WHAT IT ACTUALLY DOES FOR HUMAN CAPITAL

a s emtreatment, vaccination and nutrition advice within walking distance of
gl a village, so a small illness is treated before it becomes a long absence from
Primary healthcare centres Bring

a school or work

. com
emtraining — so investment
Doctors Turn a health complaint into a diagnosis. They are themselves a product of

m a s
co agl
human capital — years of education plus hospital

m . here compounds

l a seDiagnostic labs
ag
Catch a problem early, when it is still cheap to treat and costs the patient

m
days, not months

a se
Pharmacies
. com
Make the prescribed treatment actually available and affordable near home;
a g l
s e m
a
a prescription that cannot be filled cures nobody

Infrastructure — roads, transport, agl Roads carry a patient to the hospital and a child to school; clean water and
clean water, sanitation, electricity, sanitation prevent the illnesses in the first place; electricity and connectivity

co m
.
internet let a student study after dark and take a SWAYAM course

se m
o m l a
ag one: productivity is
.cWhy this is an economic argument and not just a kind
m defined in the chapter as the ability to do more in a particular time period. Health
l a se
ag does not change the number of hours in a day; it changes how many of those hours
.c
s e m
m a
a person can actually use, and how well. A worker who loses fifteen days a year to

m . co
preventable illness has lost about a fortnight of output — and a child who misses
e agl
l as
those days loses something worse, because the learning of one year is what the next
g
year is built on. a

co m
m .
m as e
.co


a g l Page 14 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Connect it up: this is why the demographic dividend on page 170 depends on
“quality education, health, training, and skilling” together. A young population that is
unwell is not a dividend at all — it is a cost.

LET’S EXPLORE — Page 169
Social and cultural influences

LET'S EXPLORE

Q1 Let’s do a small experiment. Make a list of 10 working adults in your family and
neighbourhood. Ask them to describe the culture at their workplace. Share notes
with your classmates. What did you discover? What are some adjectives that occur
more frequently?

How to run it properly. Ten people is a small sample, so make it a varied one — try to include a
shopkeeper, a factory or construction worker, a teacher, a driver, an office employee, someone
self-employed, and at least four women. Ask the same three open questions to everyone, and
write down their own words:

1. Describe your workplace in three words.
2. What happens there if someone makes a mistake?
3. Does anyone teach you anything new at work? Who, and how?

Then pool the class’s lists and simply count how often each adjective appears. That count is
your finding.

ADJECTIVES THAT USUALLY WHAT THEY TELL YOU ABOUT HUMAN CAPITAL
COME UP OFTEN

busy, hard-working, punctual, disciplined A culture of hard work — the first quality the chapter lists

supportive, friendly, like a family Skills get passed on informally; new workers learn faster

strict, target-driven, pressured, tiring Output may be high, but ill health and mistakes rise — the healthcare
argument of page 168 in reverse

safe / unsafe, clean / dirty Directly the employer’s responsibility for “fair compensation and
working conditions” (page 181)

Page 15 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Sample answer: “Across our class’s 300 responses, the commonest words were busy,
hard-working and helpful. Only a few people said they were formally trained at work;
most said they had learnt by watching a senior. Almost nobody used the word
improvement. We concluded that our neighbourhood has a strong culture of effort
but a weak culture of deliberate, continuous improvement.”

Why the chapter asks this: to make the abstract idea of a work culture measurable.
Japan’s kaizen — ‘continuous improvement’, applied since the mid-1940s — and the
German habit of punctuality, attention to detail and quality are not laws or
machines. They are just what large numbers of ordinary workers do every day, which
is precisely what your ten interviews measure. If the word improvement never
appears in your survey, that is a real and useful discovery about the human capital
around you.

Q2 In the Chapters of the theme Tapestry of the Past, you have seen examples of the
art and architecture in India across several centuries. What do you think are the
factors that enabled their creators to achieve such high levels of excellence?
Discuss in groups and share in class.

Excellence on that scale was not individual genius; it was a whole system of human
capital. This chapter’s section on India’s ancient skill heritage supplies five factors, and each of
them maps onto something you have already met in this chapter.

Page 16 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

FACTOR WHAT THE CHAPTER SAYS WHERE YOU HAVE MET
THE IDEA

Written The śhilpa śhāstras gave detailed design guidelines for Education — knowledge
technical sculptures, paintings, buildings, wooden items and codified so it does not have to
standards jewellery; texts on sculpture prescribe exact postures, be rediscovered
colours, measurements and proportions of figures

Knowledge Knowledge was passed on from generation to generation, Training and apprenticeship —
passed down and also built on. Generations of families of sculptors human capital accumulating
and built on worked on India’s temples over centuries across lifetimes

Work treated as Work was a form of expressing one’s nature and striving Social and cultural influences
an offering for perfection, an offering to the deity or the receiver; it — the same slot that kaizen
had to be created with devotion occupies for Japan

Art and Creating products involved a unique blend of kalā (art) Neither a beautiful design that
knowledge and vidyā (knowledge) will not stand, nor a sound
together structure nobody wants to look
at

Respect for tools The tools — a type of technology — were worshipped; Technology as an enabler, page
and technique the tradition continues as Viśhwakarmā pūjā or Āyudha 176
pūjā

The most striking piece of evidence is the one in the DON’T MISS OUT box: those sculptor
families “used their skills without expecting to see the finished outcome” — a temple could
take longer than a working life. They pursued excellence by practising regularly and learning
new techniques, treating work as worship.

Why this matters for an economics chapter: it is the strongest possible
demonstration that human capital is real capital. Those builders had almost no
financial capital and very simple technology. What they had was accumulated skill,
exact standards and a culture that refused shoddy work — and that alone produced
the monuments you studied in Tapestry of the Past. Also add a factor of your own that
the box implies: steady patronage by rulers and temples, which gave the craft
families a market for centuries so the skill was worth passing on.

THINK ABOUT IT — Page 170

Page 17 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Challenges to human capital

THINK ABOUT IT

Q1 Harsh, a student at government school in Grade 8, had to drop out of school two
years back as his father lost his job. How do you think the loss of schooling years
will affect Shivay when he grows up?

Those two years will follow him into every job he ever applies for. Losing schooling does not
simply mean knowing less; it means that the human capital which education and training were
supposed to build was never built, and everything that depended on it becomes harder.

WHAT HE LOSES WHAT FOLLOWS FROM IT

Foundational Grade 8 onwards is where reading, arithmetic and reasoning become tools for other subjects.
learning Missing it does not cost two years of knowledge — it makes the next years unlearnable,
because each year is built on the last

Certificates and Most training courses need a school-leaving certificate. Even SWAYAM’s free courses are
eligibility designed from Grade 9 onwards. Without the certificate, the doors to skilling stay shut

Skill, and therefore He is likely to be limited to unskilled work — daily-wage labour, helper jobs — which pays
earnings less, is insecure, and offers little training on the job

Bargaining power A worker who cannot read a contract or a safety notice is easier to underpay and likelier to be
and safety hurt

The next Low earnings make it likelier that his own children are pulled out of school when the family
generation next faces a shock. This is how one job loss becomes a cycle

And the loss is not only his. The chapter says India’s demographic dividend depends on
individuals having access to quality education, health, training and skilling. Every dropout is one
young person subtracted from that dividend — and India has to multiply that by lakhs.

Why it is not hopeless: human capital can be rebuilt, just more slowly and at higher
cost. Open schooling and bridge courses can restore the certificate; the National
Career Service can connect him to work; a skill course can give him a trade. The
point of the question is not to predict doom but to show why keeping a child in
school is cheaper than repairing the damage later.

Page 18 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

co m
m.
Note on the question: the textbook names the boy Harsh in the first line and Shivay

as e
com l
in the second. It is the same student — a slip in printing. Answer for the boy who
. a g
em
dropped out.
a s
agl

com
ag
What problems could businesses face when they do not find workers with the
.
Q2

e m
as
required skills?

a g l

The business is left holding land, capital and technology that nobody can use properly.
co m
That is the chapter’s general rule applied to one factor: when a factor is missing or misused,
em.
m l as
.co g
production can become inefficient or can be halted.
a
em falls or stops. Machines stand idle for want of an operator; orders are delivered late;
a s
gl a whole shift may be cancelled. This is the difference between an inefficient business and a
Output

a
halted one.
m a s
. c o agl
Quality suffers and waste rises. An untrained worker spoils raw material, damages tools,

s e m be scrapped — so the cost of every good piece
and produces defective pieces that must
rises.
a g la
Accidents increase. Safety procedures are part of training. Where the training is missing,

m
the risk moves to the workers themselves.
. co
m
Training costs go up. The firm must now do what the education system did not, and pay for

o m l a se
it — which is exactly why the chapter lists “skill development and training” among a
.c a g
m
se Wages for scarce skills are bid up. A few skilled people can demand much more, and may
business’s responsibilities on page 181.
a
agl leave for a competitor — so costs rise while the shortage remains.

se m
m a
New technology cannot be adopted. There is no point buying a computer-controlled

.c o
machine that nobody in the district can run. The firm stays stuck with older methods while
a g l
se m
l a
rivals move ahead.
The firm may move away.ag Businesses locate where the skills are. A district that cannot
supply skilled workers loses the investment, and with it the jobs it needed.

. c om
s e m not a hiring
The deeper point: a skill shortage is a factor-of-production problem,
om The other three factors are useless without the
cproblem. a This is why a
glfourth.
. a
as em country’s spending on schools, ITIs and health is treated by economists as
agl investment, exactly like spending on machinery — it is building the input without
c
m .
e
which the machinery cannot run.
m a s
e m . co agl
g l as
THINK ABOUT IT — Page 170 a

com
m .
m ase
.co


a g l Page 19 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Demographic dividend — the value of different kinds of work

THINK ABOUT IT

Q1 Are some jobs more important than others? What would happen if nobody cleaned
the streets, collected the trash, farmers stopped cultivating the crops, doctors were
not available to treat patients, and so on?

No job that society actually depends on is unimportant — and the test the question itself
proposes proves it. Ask of any job: what happens if it stops? The jobs people rank lowest turn
out to be the ones whose absence is felt fastest.

IF THIS WORK HOW SOON IT WHAT WOULD FOLLOW
STOPPED WOULD BE FELT

Street cleaning and Within days Blocked drains, flies and rats, contaminated water, outbreaks of
waste collection disease — which would then keep children out of school and
workers off work

Farming Within one season Food shortage everywhere. Restaurants, grocery shops and
vegetable vendors — the whole table on page 165 — would
have nothing to sell

Doctors and nurses Immediately Treatable illnesses become fatal; the healthcare that builds
human capital disappears

Electricity, water Within hours Factories, hospitals, schools and shops all stop together — they
supply, transport are inputs to everything

So what makes people think some jobs are more important? Usually pay and status, and
those measure something different from importance. Pay mostly reflects scarcity — how long
the training takes and how few people can do the work. A cardiac surgeon is paid far more than
a sweeper because it takes fifteen years to make one surgeon and far fewer people can do it,
not because a city could survive longer without sweepers. Confusing scarcity with importance is
the mistake this box is asking you to notice.

Why interdependence is the real answer: the chapter says the factors of
production are combined like puzzle pieces, and the same is true of jobs. The
surgeon cannot operate unless somebody cleaned the theatre, somebody generated
the power, somebody drove the ambulance and somebody grew the food she ate.
Every job is an input into somebody else’s work. That is precisely what a supply
chain means, and why COVID-19 disruption stopped production everywhere at once.

Page 20 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Worth remembering: the chapter’s section on India’s ancient skill heritage says
work itself was treated as “a form of expressing their nature and striving for
perfection, an offering to the deity or the receiver” — a view that measures work by
the devotion brought to it rather than by its rank. What is fair to demand is not that
all jobs be paid alike, but that all workers get fair compensation, safe conditions and
respect — the responsibilities the chapter sets out on page 181.

LET’S EXPLORE — Page 172
India’s ancient skill heritage — stitched shipbuilding

LET'S EXPLORE

Q1 Why do you think the use of indigenous techniques has declined? Discuss in the
class.

Because the market that paid for them disappeared, and once a craft stops earning, the
chain that passed it on breaks. The chapter gives one worked example: the stitching of ships
saw a severe decline after the arrival of Europeans in the Indian Ocean in the 16th century, and
the technique is now used only for making small fishing boats.

Page 21 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

REASON HOW IT WORKS

Loss of the market Indians had used stitched ships for over 2000 years for maritime trade and cultural exchange
across the Indian Ocean. When European powers took control of that ocean trade, the
demand for large Indian ships collapsed — and a technique with no buyers stops being
practised

Competition from Factory-made goods are cheaper per piece and available in large quantities. A hand-made
mass production product needs far more labour per unit and cannot match the price, however much better it
may be

Newer materials Nailed and later iron and steel hulls, and today fibreglass, replaced stitched wooden planks;
and methods machine-spun thread replaced hand-spun; synthetic dyes replaced natural ones

The chain of This knowledge was passed on from generation to generation. When earnings fall, the next
transmission broke generation takes other work — and one skipped generation can end a craft permanently,
because nobody is left to teach it

Little was written Some crafts had texts like the śhilpa śhāstras, but most technique lived in the hands of
down practitioners. Unwritten knowledge disappears with the last practitioner

Changing tastes, Buyers came to see machine-made goods as modern and hand-made ones as old-fashioned,
and status and craft work was often poorly paid, so families moved out of it

Read it as an economics problem, not only a sad story: a technique survives only
if all four factors keep flowing to it — a market that pays, workers willing to learn it,
capital to buy materials, and someone to organise the sale. Break any one and the
craft dies. That also tells you how to revive one, and the chapter names a way: 3-D
printing can help revive dying art forms in textiles by producing handloom
products on a large scale to serve the market. The technology that displaced a craft
can sometimes give it back a market.

Did you know? Cords instead of nails made stitched hulls flexible, which is why they
handled the Indian Ocean so well — a hull that can flex absorbs the shock of waves
and coral instead of splitting. The technique was not primitive; it was suited to its
sea.

Page 22 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Q2 Find out some techniques and products from your region that showcase human
effort and skill. Explain briefly using drawings and text in the class.

How to do this well. Choose one product actually made near you rather than a famous one you
have only read about, and find someone who makes it. Your presentation should answer six
questions, in this order:

1. What is it, and what is it used for?
2. What raw material does it start from, and where does that come from? (This is the land in
it.)
3. What are the steps, from raw material to finished piece? Draw the steps as a flow chart, the
way Fig. 7.23 does for a mobile phone.
4. What tools are used, and how long does the skill take to learn? (This is the capital and the
human capital.)
5. Who taught the maker, and will the next generation learn it?
6. Who buys it now, and is demand rising or falling?

The chapter itself shows two such products in its photographs: bamboo and cane products
from Arunachal Pradesh (Fig. 7.12) and pottery from Delhi (Fig. 7.14).

Sample answer — blue pottery, Jaipur, Rajasthan: “Blue pottery is made without
any clay. The dough is a mixture of quartz powder, powdered glass, Multani mitti,
borax, gum and water — all mineral, so the land input is unusual. It is shaped in
plaster-of-Paris moulds, dried, then painted freehand with cobalt-oxide blue, glazed
and fired once at about 800 °C. Our potter, Mr Ram Kishan, learnt it from his father
over seven years; he says the hardest skill is the freehand painting, which cannot be
taught in a class. His tools are simple — moulds, brushes and a kiln — so the capital
needed is small but the human capital is very large. He sells mostly to tourists and to
online buyers, so demand is now rising again, but only two of the twelve families in
his lane still practise it.”

What the exercise is really teaching: that in a handicraft the value sits in the
labour and human capital, not in the machinery — which is exactly what makes
such sectors labour-intensive, as page 178 explains. Look at your own flow chart
and count how many steps a machine could do. In blue pottery, the answer is almost
none, and that is the whole reason it is precious and the whole reason it is fragile.

In-text Questions — Page 172

Page 23 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

Capital
co m
e m.
m l as
Q1
.co
But where do businesses get the capital?
m a g
l a se
ag

m
From three sources, in a definite order of size. Remember first what has to be paid for: capital

. co ag
m
is money plus human-made resources used to produce goods and services — machinery, tools,

l a se
equipment, vehicles, vending carts, computers, shops, factories and office buildings. All of that

agearns a rupee.
must be bought before the business

co m
m.
SOURCE WHO USES IT WHAT IT COSTS THE BUSINESS

om l a se
savings,.c g risk
Personal Generally the first source for Nothing formal, but the amount available is small

m
efriends
family athe
s
individuals starting a business — and the family bears

a
agl
and Ratna began this way

A bank loan Ratna’s own funds were insufficient, Interest — money paid by the borrower to the

m a s
.co agl
so she took a loan from the bank to lender for using their money for a specific time —

se m
meet the shortfall repaid along with a part of the loan amount over a

l a
period

a g
The stock Large companies needing a lot of A dividend — an amount paid regularly by the

co m
market money to expand raise it from the company to its shareholders out of its profits
general public by selling shares
m .
m as e
.co a g l
a s em Why a business does not simply wait and save: because the capital is needed first.

agl Ratna could not serve her first customer until the kitchen equipment was bought
m
and the rent paid. A loan lets a business use tomorrow’s earnings to buy today’s

a se
com l
equipment — which is useful and risky in the same breath, because the interest
. a g
e m
must be paid whether or not the customers arrive. That is the entrepreneur’s risk,
as risks by investing money and time” as one of the
and it is why Fig. 7.16 listsl“takes
g
five entrepreneurial tasks.a

. c om
m promise — you
Tip: notice the difference between the two costs. Interest is aefixed
s
omit even in a bad year. A dividend is a share of profit a
.cowe ag—l if there is no profit, there
m is nothing to share. That is why lenders demand security and shareholders demand
l a se
ag
c
growth.
m .
m a s e
e m . co agl
s
LET’S EXPLORE — Pagela173
ag

co m
m .
m as e
.co


a g l Page 24 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Capital

LET'S EXPLORE

Q1 Identify a factory in your region. Find out how much capital may have been
invested in the construction of the factory (you may provide an estimate). What
kinds of equipment does the factory use to create its finished products?

How to build the estimate. You will not be given a factory’s accounts, so estimate it the way an
economist would — item by item, and say clearly that it is an estimate. Ask the manager, or a
supplier, or work from local land rates. Cover four heads:

1. Land and building — area of the plot × the local rate per square metre, plus the cost of the
shed.
2. Machinery and equipment — list the main machines and ask their approximate price.
3. Other fixed capital — electrical fittings, generator, water connection, computers, furniture,
delivery vehicles.
4. Working capital — the money always tied up in raw material, wages and unsold stock.
Businesses forget this one, and it is often a fifth to a quarter of the total.

Page 25 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Sample answer — a small steel utensil unit on the edge of our town:

HEAD OF CAPITAL ESTIMATED
AMOUNT

Plot (about 1,000 sq m) and factory shed ₹60 lakh

Machinery — power press, deep-drawing press, lathe, buffing and ₹35 lakh
polishing machines, welding set

Electrical fittings, generator, water connection ₹8 lakh

Delivery vehicle ₹7 lakh

Computers, office furniture, weighing and testing equipment ₹3 lakh

Working capital (steel sheet, wages, unsold stock) ₹12 lakh

Total estimated capital
= 60 + 35 + 8 + 7 + 3 + 12 (₹ lakh)

= ₹125 lakh = ₹1.25 crore

Share that is land and building = 60 ÷ 125 = 48%

Share that is machinery = 35 ÷ 125 = 28%

“The owner told us the money came from his own savings and a loan from a bank
under an MSME scheme, on which he pays interest every month.”

The second half of the question — the equipment. List the machines in the order the material
passes through them, because that turns a list into an explanation of the process. For this unit:
the steel sheet is cut on a shearing machine, pressed into shape on a deep-drawing press, the
edges are trimmed on a lathe, the joints are welded, the surface is buffed and polished, the
piece is washed, checked, and packed.

Page 26 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

What the numbers are telling you: in this unit almost half the capital is locked in
land and building — which cannot make anything by itself — and only about a
quarter is in the machines that actually shape the metal. That is normal for a small
manufacturing unit, and it is one reason a beginner prefers to rent a shed rather
than buy one, exactly as Ratna leased her space instead of buying land. Compare it
with a vegetable vendor from the table on page 165, whose whole capital is a
basket, a weighing scale and a cart, and you can see why the two businesses raise
their money in completely different ways.

THINK ABOUT IT — Page 175
The man who dreamed big for India — J.R.D. Tata

THINK ABOUT IT

Q1 What could be the lessons for young entrepreneurs that you can gather from the
above case?

Five lessons come straight out of J.R.D. Tata’s record, and each one matches a task in Fig.
7.16.

LESSON THE EVIDENCE IN THE CASE

1. Solve a problem the He started Tata Airlines in 1932, when India had no airline at all. It later became
country does not yet know it Air India. Being early is uncomfortable and is where the largest gains lie
has.

2. A business is judged by He believed businesses should not only make money but also help society — the
more than its profit. same idea that India later wrote into law as CSR in 2014

3. Look after the people who He was known for caring about his workers and believed in providing them with
do the work. good working conditions — in this chapter’s language, he invested in his human
capital

4. Build breadth, not one Under his leadership the Tata Group expanded into steel, cars, power and
lucky product. chemicals — a group that survives one industry’s bad decade because it is not
standing on one leg

5. Character is the long-term He was “a man of vision, hard work, and honesty”. In 1992 he received the
asset. Bharat Ratna, India’s highest civilian award, for his service to the nation

Page 27 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

A sense of the time-scale

Born 1904 · founded Tata Airlines in 1932 → he was about 28

Bharat Ratna in 1992 → 60 years after the airline, at about 88

The lesson hiding in those dates: entrepreneurship is not a short game. Nothing
he is remembered for paid off quickly. A young entrepreneur reading this case
should take away patience as much as ambition — the recognition came six decades
after the risk.

Q2 Does the existing knowledge of the entrepreneur help in finding solutions to the
problem at hand? Or do they need to seek other sources?

Both — and the honest answer is that existing knowledge is necessary but never
sufficient.
What existing knowledge does. It is what lets an entrepreneur recognise a problem in the first
place. Ratna could see that highway travellers had nowhere good to eat because she knew that
road and knew food. J.R.D. Tata could imagine an Indian airline because he was himself among
India’s first licensed pilots and understood aviation. Existing knowledge also tells you which
risks are worth taking — the difference between a bold decision and a reckless one is usually
just information.
Why it runs out. By definition an entrepreneur is doing something that has not been done in
that place before, so no one’s past experience covers all of it. The chapter shows the
entrepreneur reaching outside their own head at every stage:

Fig. 7.23: an R&D team conceptualises new features; teams of software, electrical and
mechanical engineers with project managers use their expertise to develop the product.
The entrepreneur’s job is to provide guidance on how resources should be used — not to
know everything.
Fig. 7.16 says the entrepreneur combines various factors of production. Combining
implies going out and getting what you do not have.
Capital comes from a bank or the stock market — outside sources of a different kind.
Even India’s ancient craftsmen worked this way: knowledge was passed down “and also
built on”, and the śhilpa śhāstras existed precisely so that no sculptor had to start from
nothing.

Page 28 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

co m
m.
The clean way to say it: existing knowledge tells you which problem to attack; other

m l a se
sources tell you how to solve it. An entrepreneur who refuses to consult others is
o
limited to.cproblems they have already met — which is a very small a gset of problems,
m
e an important one. Today those other sources include free platforms like
srarely
g l
and a
aSWAYAM, expert hires, suppliers, and above all customers, who tell you fastest of all
what is wrong with your idea.
co m
e m . ag
g l as
Q3
a
Is profit the only motivation for an entrepreneur? Why or why not?

co m
se m.
a

o m l
No — butcit is a necessary one, and it is worth being precise aboutgthe difference between
m . a
as e
l
necessary and only.
g
a Why profit cannot be the only motive. The chapter lists what else an entrepreneur is after:
m a s
.co agl
An entrepreneur’s vision for solving a problem brings innovative products and services to

m
market that benefit society and the nation.

l a se
g
They create job opportunities and support livelihoods — Ratna’s seven employees.
a
In return they derive a deep sense of satisfaction from seeing their dreams become a
reality and serving the people.

com
.
Fig. 7.16 makes “contributes to the welfare of society with his/her innovation” one of the five
m
m
defining tasks.
o l a se
g not only make money but
.c Tata is the case in point: he “believed that businesses should
a
m
J.R.D.

a se also help society”, and looked after his workers’ conditions.
agl Why profit still matters. Without a surplus a business cannot repay its loan with interest,
se m
m a
cannot pay its workers fairly, cannot buy better technology, and cannot survive a bad year — so

.c o a g l
m
it cannot go on serving anybody. Profit is the test that says the customer valued the product

l a se that never makes one is consuming society’s land, labour
more than the inputs cost. A business

ag than it took.
and capital and giving back less

. c om
The balanced position: treat profit as the condition of staying alive and purpose as

s e m is also why India
the reason for being alive — food, not the point of the day. That

. om Corporate Social Responsibility a law in 2014, athe
cmade glafirst nation in the world to
as em do so, requiring companies to spend 2 per cent of their average profits of the last
agl three years on CSR activities. The law does not abolish profit; it asks that a slice of it
c
m .
flow back to the society whose resources produced it.
m a s e
e m . co agl
g l as
a

com
m .
m ase
.co


a g l Page 29 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Q4 What are the other personality traits required to be a successful entrepreneur?

Beyond the five tasks in Fig. 7.16, the traits that let a person actually perform them:

TRAIT WHY THE JOB NEEDS IT

Resoluteness and The chapter’s own word is resolute — an entrepreneur identifies a problem and is
tenacity resolute to solve it. Most ideas fail several times before they work; the trait that
separates founders is not brilliance but refusal to stop

Willingness to bear risk They invest their own money and time with no promise of return — and must be able to
sleep while the loan is outstanding

Vision and imagination Seeing an airline in a country with no airline, or a restaurant on an empty stretch of
highway

Decisiveness Fig. 7.16: makes the key decisions on the operation and functioning of the business —
usually before all the facts are in

Honesty and integrity Named in J.R.D. Tata’s case. Suppliers give credit, banks give loans and workers stay
only for someone whose word holds

Ability to work with You cannot “combine various factors of production” without persuading engineers,
people workers, lenders and customers to join you

Curiosity and Technology keeps replacing old technology; an entrepreneur who stops learning is
willingness to keep running yesterday’s business
learning

Empathy Both for the customer whose problem you are solving and for the workers who solve it
— the basis of J.R.D. Tata’s concern for working conditions

Discipline and The German work ethic in the chapter is exactly this trait, scaled up to a nation
attention to detail

Worth arguing about in class: almost none of these traits are fixed at birth.
Tenacity, decisiveness and attention to detail grow with practice, which is the same
claim the chapter makes about skill — “the ability to do an activity or job well with
practice and training”. Entrepreneurship, on this reading, is itself a form of human
capital.

In-text Questions — Page 176

Page 30 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Technology: An Enabler of Production

Q1 Have you noticed how old technology gets replaced by a new, better one?

Yes — and the chapter’s point is that this happens because the new one makes the same
job easier, faster or cheaper, not because the old one stopped working.

OLD TECHNOLOGY WHAT REPLACED WHAT ACTUALLY IMPROVED
IT

Sending letters by post Email The chapter’s own example — we communicate
quickly and at a lower cost

Carrying cash, standing in a UPI (Unified Payments Payment at the click of a button
queue to pay a bill Interface)

Asking for directions, using a GPS It can discover the shortest routes for transporting
paper map goods — so the same truck delivers more in a day

Judging the weather by Advance weather A farmer can decide when to sow, spray or harvest
experience updates on a phone

Spraying fertiliser by hand Drones (Fig. 7.18) Faster coverage, less exposure of the worker to
chemicals

But the chapter immediately adds a caution, and it is the more interesting half:
technological progress does not always mean replacing old technologies. Some, like pulleys
and wheelbarrows, are still in use — you can see them in Fig. 7.20 on a construction site and
Fig. 7.21 on a boat. Some early forms of technology that have existed since ancient times are
still in use today.

Why some old technologies survive: they are cheap, simple, need no electricity or
network, can be repaired by the person using them, and work exactly where a
modern substitute is awkward — on a boat, up a scaffold, in a village during a power
cut. A wheelbarrow is not a failed machine waiting to be replaced; for its job it is still
the best answer. The test is never “is it old?” but “does anything else do this job
better here, at this cost?”

Tip for the exam: if you are asked whether new technology always replaces old, the
correct answer is no, and the two examples the book gives you — pulleys and
wheelbarrows — are the ones to quote.

Page 31 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

LET’S EXPLORE — Page 178
Technology paving the way for accessing knowledge, skills, and job opportunities

LET'S EXPLORE

Q1 Can you think of some technological advancements that have impacted the lives of
people and communities around you? Talk to elders at home and in the
neighbourhood about it.

How to get a real answer out of the elders. Do not ask “has technology changed life?” —
everyone says yes. Ask about a specific task and a specific time:

How did you send money to a relative in another town before?
Where did you get water, and how long did it take?
What did you cook on, and who collected the fuel?
How did you find out that a job was available, or that a relative was ill?
What did the family do when someone fell sick at night?

ADVANCEMENT WHAT CHANGED FOR THE COMMUNITY

Mobile phones and UPI A migrant worker sends money home the same evening instead of travelling
with cash; a vegetable vendor takes payment without change

LPG connections Hours a day saved collecting firewood — mostly by women and girls — and
much less smoke indoors

Electricity, and now solar panels Study hours after dark; refrigeration for a shop; a pump for irrigation
and LED lights

Tube wells, drip irrigation, More output per worker in farming — the chapter’s point that increased
tractors, threshers machine use in agriculture lowers dependence on labour

Advance weather alerts and GPS Farmers plan operations; transporters find the shortest routes

Online learning and A course or a specialist opinion reaches a village that has neither a college nor
telemedicine (Fig. 7.22) a hospital

SWAYAM and the National Free courses from Grade 9 onwards in robotics, aquaculture, textile printing;
Career Service job listings from plumbing to accounting

Page 32 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Sample answer: “My grandmother said the biggest change in her lifetime was not
the phone but the bus route and the tar road. Before it, a sick person was carried
on a cot to the main road. After it, the primary health centre became reachable in
twenty minutes, girls began going to the high school in the next town, and vegetable
growers could send produce to the market the same morning instead of selling it
cheap in the village. One piece of infrastructure changed health, education and
income together.”

Be fair to both sides. The same interviews usually turn up losses too — the village
weaver who could not compete with mill cloth, the letter-writer whose work
vanished, the tank that dried up when everyone drilled borewells. The chapter itself
insists on this balance: technology is an enabler, but page 180 reminds us that
production can degrade the very resources it uses. A good report records both.

Q2 Think of an invention that you would like to make to solve a problem. Write down
its related information on a piece of paper, such as its name, what it does, and how
it works, sketches or drawings of what it would look like, and so on. Discuss with
your classmates.

Start from a problem you have actually watched somebody have, not from a gadget you
would like to own. That is the order Fig. 7.16 puts it in — an entrepreneur first “identifies a
problem”, and only then finds an innovative solution.
What your page must contain — use these seven headings:

1. The problem, in one sentence, and whose problem it is.
2. Name of the invention.
3. What it does — the promise, in one line.
4. How it works — the steps, in order.
5. A labelled sketch. Label the parts, not just the outline.
6. Inputs it would need to be made — go through land, labour, capital, entrepreneurship and
technology. This is the part most students skip and the part this chapter is testing.
7. Who would buy it and at roughly what price, and what could go wrong.

Page 33 of 53

ase
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

co m
m.
Sample answer — the ‘Thanda Thela’, a solar cold-box for a vegetable cart

m as e
.co g l
Problem: the fifteen vegetable vendors in our locality (see the table on page 165)
a
a s em
throw away a part of their leafy vegetables every evening because they wilt in the

a gl sun. Their entire stock is a perishable that they cannot store.
What it does: keeps about 30 kg of leafy vegetables at roughly 10 °C on the cart

c om
itself, all day, with no electricity connection.
. ag
s e m panel forms the roof of the cart. It
How it works: a 100-watt flexible solar
charges a small battery, whichla
a g runs a 12-volt fan blowing air across a tray of ice
slabs inside an insulated box; a simple thermostat switches the fan off when the
box is cold enough. A drain pipe takes the melt-water into a bottle so nothing
co m
drips on the road.
em.
m l as
.co g
Inputs: land — no plot needed, but the aluminium, plastic and silicon in it all

e a
m from minerals; labour — a fabricator to bend the frame, an electrician to
s come
la wire the panel; capital — the panel, battery, fan, insulated box, and about ₹12,000
ag to build one; entrepreneurship — I would build five, lend them to vendors free for

m a s
.co agl
a month and charge rent afterwards; technology — solar photovoltaics and a
thermostat.
se m
g l a
a
Who buys it and what could go wrong: vendors will pay only if it saves more
than it costs, so the whole idea stands or falls on one number — how much stock

co
they currently lose. If that is under ₹50 a day, the invention fails, and the honest
m
m .
e
thing is to find that out before building it.
m l as
m .co a g
a s eWhy
agl the last bullet is the most important one: an entrepreneur “takes risks by
investing money and time”, and the cheapest way to reduce that risk is to test the
se m
com drawing.
assumption before spending. Ten minutes spent asking three vendors what they
throw away is worth more than a .beautiful g l a
em a
a s
agl
THINK ABOUT IT — Page 180
co m
m .
m as e
.co a g l
se m
g l a
a c
m .
m a s e
e m . co agl
g l as
a

co m
m .
m ase
.co


a g l Page 34 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Responsibilities towards Factors of Production

THINK ABOUT IT

Q1 How are local communities and biodiversity affected by such activities? Do you also
know some places around you that have seen water and land degradation over
time? Discuss in class.

The same activity gives with one hand and takes with the other, and it is usually the same
people on both sides of the bargain. The chapter’s example says it exactly: in Tamil Nadu,
many people earn money by working in leather factories. This helps the local economy — but
the waste from these factories can pollute rivers and soil.

WHO OR WHAT HOW
IS AFFECTED

Local communities Drinking water from wells and rivers becomes unsafe; skin and stomach illness rises; crops
on polluted soil yield less; fishing and farming livelihoods shrink even as factory jobs grow,
so a family may earn a wage and lose a field in the same decade

Biodiversity Fish and other aquatic life die or stop spawning; soil organisms that keep land fertile are
killed; birds and animals that feed on the river move away or are poisoned. Once a species
disappears from a stretch of river it rarely returns on its own

Everyone, later When old smartphones are not recycled properly, lead and mercury leak into the ground and
water. This pollution is dangerous for people, animals and plants — and unlike a bad harvest
it does not clear in a season

The principle the chapter draws from this is that producers must use natural resources
responsibly — so that we can meet our needs today without making it harder for future
generations to meet theirs. They should reduce waste, avoid pollution, and protect the
environment while making products, and adopt sustainable practices to replenish natural
resources for future use. Two of its own pictures show how: recycling industrial wastewater
before releasing it into water bodies (Fig. 7.24) and using recycled products as inputs (Fig.
7.25).

Page 35 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

How to do the local half of the question — sample answer: “Behind our town the
stream that runs past the dyeing units used to be used for washing clothes and for
cattle; elders say there were fish in it twenty years ago. Today it runs coloured after
mid-morning, nothing grows on its banks, and the borewells nearest to it were
abandoned. The units employ about 200 people from our own locality. When we
discussed it in class we agreed that the answer is not to shut them down but to insist
on effluent treatment before release, as in Fig. 7.24 — the jobs and the stream are
both ours.”

Why this belongs in a chapter on factors of production: because land is a factor,
and unlike capital it cannot be bought again. A machine that wears out can be
replaced from profits; a poisoned aquifer or an eroded soil cannot. Degrading land is
therefore not a side-effect of production — it is destroying one of the four inputs
production runs on. That is the economic reason behind the moral one, and it is
why the chapter ends by saying resources “need to be preserved and utilised
judiciously”.

Questions and activities — Pages 182–183
End of chapter

Q1 How are the factors of production different from each other? What are the
difficulties you faced in classifying the factors of production in the exercise given in-
text?

They differ in where they come from, who supplies them, what they are paid, and whether
they can be made more of. Comparing them on those four points is what makes the
classification useful rather than a list of names.

Page 36 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

BASIS LAND LABOUR CAPITAL ENTREPRENEURSHIP

Origin Gift of nature — Human beings, Human-made; A person’s idea, judgement and
soil, forests, through physical and itself produced willingness to bear risk
water, air, mental effort earlier, then used
sunlight, to produce again
minerals, oil,
natural gas

Can more No — its total Yes, and its quality Yes — by saving Rare; it can be encouraged
be made? supply is fixed can be raised and investing but not manufactured
and it can be through education,
degraded training and health

Mobility Immobile — a Mobile, but people Money moves Mobile — the entrepreneur
plot, a mine or a move reluctantly instantly; goes where the opportunity is
river cannot be machinery moves
shifted with cost

What the Rent, if not Fair compensation Interest to a Whatever is left — profit,
book says purchased for their labour lender; a and no guarantee of any
it is paid outright dividend to
shareholders

Risk None by the Little — wages are Interest is due All of it. The entrepreneur is
carried owner if rent is due whether or not regardless paid last, or not at all
paid the goods sell

The difficulties in classifying — and they are real ones.

Inputs that sit on a boundary. Is electricity land or capital? It is produced by people, but
from coal, water or sunlight. Is storage space land or capital? The site is land, the building
on it is capital, and one rent covers both.
Raw materials that have already been worked on. Fresh produce began as land, but the
crate of vegetables delivered to the restaurant already contains labour, a vehicle and fuel.
Where do you stop tracing it back?
Labour or human capital? The report lists “knowledge and skills to handle mobile
components” as an input. That is not the effort of labour; it is the human capital behind it.
The book keeps them separate but our table did not have a column for it.
One person playing three parts. The owner of a small grocery shop supplies the capital,
does the labour, and is the entrepreneur — all at once. In a large company these are three
different sets of people, which is why the classification looks cleaner there.
Money is not capital by itself. Money in a bank produces nothing; it becomes capital only
when it is turned into equipment, stock or a shop.

Page 37 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Why the difficulty is not a flaw: the categories are tools for thinking about
payment and supply, not natural kinds. Whenever an item is hard to place, ask which
question you are trying to answer. If you want to know who must be paid, put
electricity with the supplier who bills you. If you want to know what nature
contributes, trace it to the coal. Both answers are correct for their own question.

Q2 How does human capital differ from physical capital?

Physical capital is the machine; human capital is the ability to use it well. The chapter
defines capital as any asset, physical or financial, used to produce goods and services, and
human capital as the specialised skills, knowledge, abilities and expertise required to
perform labour — the quality and efficiency of that labour.

POINT OF PHYSICAL CAPITAL HUMAN CAPITAL
DIFFERENCE

What it is Machinery, tools, equipment, vehicles, Skills, knowledge, abilities, expertise,
vending carts, computers, shops, factories, experience and health carried by a
office buildings — plus the money that buys person
them

Where it lives Outside the person; you can see it, weigh it Inside the person; visible only in the
and photograph it quality of the work done

How it is built By saving and buying — a purchase, By education, training, healthcare, use of
completed in a day technology and social context — over
years, and it cannot be bought ready-
made

Can it be sold or Yes — sell the machine and it belongs to No. It can be taught, but the teacher does
transferred? someone else not lose it by teaching. It cannot be
separated from the person who holds it

What happens It wears out; every year it is worth less It usually grows with practice, and is lost
with use only through disuse, illness or death

Who chiefly The firm, from its own funds or a loan The family, the school, the health system
builds it and society — plus the firm through on-
the-job training

Page 38 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

co m
m.
Why the difference decides policy: if you want more physical capital you need

m l a se
savings and loans. If you want more human capital you need schools, teachers,
o
.c centres and training institutes — and you must wait a g a generation for
m
primary health
se That is why the chapter ties India’s demographic dividend to “quality
theareturn.
l
g
aeducation, health, training, and skilling” and not to factories. A country can import
machines; it cannot import its own people’s skills.
co m
e m . ag
g l as
a
One-line answer if you are short of time: physical capital is the human-made
things used in production; human capital is the knowledge, skill and health inside the
people who use those things — and only the second one can improve on its own.
co m
e m.
m l as
.co a g
a s em
l
How do you think technology is changing the way people develop their skills and
g
Q3
a knowledge?

m a s
.co agl

a s em
aglgeographical barriers, allowing people to access knowledge,
Its biggest change is that it has removed the geography from learning. The chapter puts it
exactly: technology has eliminated
skill development and jobs in India and abroad.

co m
m .
WHAT HAS
m
THE CHAPTER’S EVIDENCE
as e
.co
CHANGED
a g l
s m you can
eWhere
gl a
a
Students benefit from learning from anywhere. A village with no college is no longer cut off
learn from one

se m
comup income g l a
.
When you can Learners go at their own pace, while pursuing other jobs or courses — so a working adult
learn
em
can retrain without giving a
a s
What you can
a
SWAYAM gl runs on MOOCs and offers courses from Grade 9 onwards in subjects like
learn robotics, aquaculture and textile printing — subjects most schools could never staff

co m
What it costs
m .
e
Those courses are free of cost, so ability to pay stops deciding who gets skilled

m l as
.co a g
em the skill
Finding work with The Government’s National Career Service lists jobs across sectors from plumbing to

l a s accounting — learning and hiring are joined up

ag c
m .
e
And it changes the content of skills, not only their delivery. A farmer now needs to read a

m a s
co agl
weather alert; a transporter needs GPS; a shopkeeper needs UPI; a surgeon works alongside

m .
e
robots (Fig. 7.19) and a sprayer flies a drone (Fig. 7.18). Skills that were purely manual now have
a digital layer on top of them.
g l as
a

co m
m .
m as e
.co


a g l Page 39 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Be honest about the limits. Online access needs a device, electricity and
connectivity, which not every household has — so technology can widen a gap as
easily as close it. And some skills cannot be learnt on a screen: a welder must burn
some metal, a cook must spoil some dishes, and the chapter’s own definition of
training is hands-on — observing construction sites, testing materials,
understanding safety procedures. The best pattern is the one the civil-engineering
example describes: learn the principles online or in class, then practise them in a real
workplace.

Q4 A skill is something you learn and practice to get better. It helps you do things well,
like playing a sport, creative writing, solving math problems, cooking, or even
communicating well with people. If you could learn one skill today, what would it
be and why?

This one is yours to answer — but a strong answer does three things rather than one: it
names the skill exactly, it gives a reason connected to a real situation, and it says how you
would practise it, because the chapter defines a skill as the ability to do a job well with practice
and training. Vague answers like “I want to learn coding” are weak; “I want to be able to write a
working program that solves one problem I actually have” is strong.

PART OF A GOOD ASK YOURSELF

Name it precisely Not “music” but “playing the tabla”; not “speaking well” but “speaking for three
minutes in front of a class without notes”

Why this one What can you not do today that this would let you do? Who else benefits?

How you would learn it Who could teach you — an elder, a teacher, a neighbour, a free SWAYAM course?
How much practice a week?

How you would know it A test you could actually pass in six months
worked

Page 40 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Sample answer: “I would learn to speak in public without notes. In our school
every group project ends with a presentation, and I know the material but freeze
when I stand up — so my knowledge is worth less than it should be. It is a skill, not a
talent: it improves with practice and training, exactly as the chapter says. I would
practise by reading aloud for ten minutes every day, then speaking for two minutes
to my family each week on something I had just read, and by volunteering for the
morning assembly once a month. My test would be to present our next group
project alone, for three minutes, without holding a paper. I chose this over a
technical skill because it multiplies every other skill I ever learn — an engineer who
cannot explain a design has to wait for someone else to explain it for her.”

The economics behind your choice: whatever you pick, you are building human
capital — and human capital is the one form of capital nobody can take from you. It
also has a feature physical capital lacks: it grows with use. A machine used every day
wears out; a skill used every day gets sharper.

Q5 Do you think entrepreneurship is the ‘driving force’ of production? Why or why not?

Yes — in the specific sense that entrepreneurship is the factor that sets the other three in
motion; but no, if ‘driving force’ is taken to mean that it could produce anything by itself.
State the position first, then defend both halves.
The case for calling it the driving force. Land, labour and capital are all passive. A plot lies
empty, a machine stands idle and a skilled worker stays unemployed until somebody decides
what should be made and takes responsibility for it. Fig. 7.16 lists what that somebody does,
and every item is an act of initiative:

Identifies a problem and is resolute to solve it with an innovative solution — nothing is
produced until a need is spotted.
Takes risks by investing money and time — the other three factors are paid whether or
not the product sells; only the entrepreneur is not.
Combines various factors of production — this is literally the act of production beginning.
Makes key decisions regarding the operation and functioning of the business.
Contributes to the welfare of society with the innovation, creating jobs and supporting
livelihoods.

Ratna is the small case, J.R.D. Tata the large one: India had pilots, capital and land in 1932, but
no airline until one person decided to start one.

Page 41 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

The case against overstating it. An entrepreneur with no capital cannot buy machines, with no
skilled labour cannot run them, and with no land or raw material has nothing to work on — so
entrepreneurship organises production, it does not create it. Production also happens without a
private entrepreneur at all: government departments, cooperatives such as milk unions, and
family farms all combine the factors without one. And an entrepreneur’s decisions can as easily
destroy value as create it, which is why the chapter follows the entrepreneur chapter with a
section on responsibilities.

The precise way to hold both: entrepreneurship is the initiating and organising
factor — the one that decides what shall be produced, how much of each other
factor to use, and who bears the loss if it fails. Calling it the driving force is fair. Calling
it the whole engine is not, because the chapter’s own image is a set of puzzle
pieces, and a puzzle has no single piece that is the picture.

Q6 Can technology replace other factors like labour? Is this good or bad? Support your
answer with the help of an example.

Yes, technology can replace labour — but it replaces tasks rather than people, and
whether that is good or bad depends entirely on whether the displaced workers are
retrained.
The book’s own example of replacement: increased machine use in agriculture can lower
dependence on labour. A tractor and a thresher do in a day what a dozen workers did in a week,
so fewer hands are needed for the same harvest. Add the chapter’s other cases — email
replacing the post, drones spraying fertiliser instead of workers with knapsack sprayers, robots
assisting in surgical processes.

GOOD BAD

More output from the same or fewer inputs — which is exactly Workers whose task is automated lose their
how the chapter defines technology’s role livelihood, and the least skilled are hit first

Dangerous, repetitive and back-breaking work is taken off Older workers may be unable to retrain; a village
human beings — spraying chemicals by hand is genuinely can lose its main source of wages in one season
harmful

Lower cost and better quality, so the product reaches more The gains go mainly to whoever owns the
people machine, so inequality can widen

New kinds of work appear — drone operators, software and The new jobs often need skills the displaced
quality engineers, online course creators, machine repairers workers do not have and appear in different
places

Page 42 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

And replacement is not the whole story. The chapter gives a case running the other way: 3-D
printing can help revive the dying art forms in textiles by producing handloom products on
a large scale to serve the market. Here technology gives a craft its market back instead of killing
it. It also reminds us that pulleys and wheelbarrows are still in use — technology does not
sweep everything away.

The judgement, stated fairly: technology raising output is good; a worker being
thrown out with no path back is bad. These are not the same event, and society can
separate them. That is precisely why the chapter lists skill development and
training as a business’s responsibility — “to ensure that workers develop the skills
necessary to remain competitive in the labour market” — and why free platforms
like SWAYAM matter. The question is not whether to allow the machine, but whether
the person it displaces is helped to stand somewhere else.

Q7 How do education and skill training affect human capital? Can they be substitute
for each other, or do they complement each other?

They both raise human capital, and they are complements, not substitutes. Neither can do
the other’s job.

EDUCATION SKILL TRAINING

What the book Helps individuals gain knowledge, starting with The process of learning the required
says it is basic literacy and extending to expertise in specific skills to do a particular job or activity
fields

What it gives The why — principles, reasoning, the ability to solve The how — the hands, the judgement,
you real-world problems you have not met before the speed, the safety habits

Where it School, college; what you learn in school enriches On the site, at the bench, in the
happens your knowledge kitchen; hands-on application

The chapter’s own example settles the question. A civil engineering student learns principles
of design and materials — that is education. Those principles are applied to building
infrastructure like roads and bridges, and the challenge lies in creating durable, cost-efficient
and eco-friendly solutions. That challenge, the book says, is achieved through training —
observing construction sites, testing materials, understanding safety procedures and hands-on
application. With education and training, individuals are prepared to excel in their careers.

Page 43 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

co m
m.
Why substitution fails in both directions. Education without training gives

m l a se
someone who can calculate the load on a beam but has never seen concrete poured
o g gives
.c not spot the bad batch on site. Training without education
a
m
— they will

l a se who can do exactly the job they were shown and cannot adapt when the
g
someone
adesign, the material or the machine changes. The first cannot execute; the second
cannot transfer. Since technology keeps replacing old technology, the second
com
.
person’s skill has a short life — which is the strongest practical argument that
e m ag
education is what makes retraining possible.
g l as
a
Remember the third partner: the chapter lists health alongside them. Education,
co m
training and healthcare are the facilitators of human capital together, and a person
em.
m l as
.co g
who is unwell cannot fully use either of the other two.
m a
l a se
a g
s
Imagine you want to start a business that produces steel water bottles. What kind
om a
Q8

. c agl
of inputs are needed? How would you obtain them? Suppose one of the factors is

s e m
a
missing; what happens to your business operations?

agl

co m
.
Work through the four factors in order, then say where each would come from.

e m
m l as
m .co a g
l a se
ag
se m
com g l a
m . a
ase
agl

co m
m .
m as e
.co a g l
se m
g l a
a c
m .
m a s e
e m . co agl
g l as
a

co m
m .
m ase
.co


a g l Page 44 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

FACTOR WHAT THIS BUSINESS NEEDS HOW I WOULD OBTAIN IT

Land A shed of about 500–1,000 sq m; a reliable Lease a unit in the nearest industrial
power connection; water for washing and estate rather than buy land — the
cooling; and the raw material itself — chapter’s point that businesses either
stainless steel, which begins as iron ore and purchase land or pay rent. Buy steel
chromium taken from the earth sheet in coils from a rolling mill or a
distributor

Labour and A press operator, a welder, polishers, an Recruit locally and through the
human capital assembler for the lid and gasket, a quality Government’s National Career Service;
checker, a designer, a supervisor, and a person hire ITI-trained press and welding
for sales and accounts hands; train the rest on the job, since
“skill development and training” is my
responsibility as an employer

Capital Deep-drawing press, shearing machine, lathe, Personal savings and family first, then a
welding set, buffing and polishing machines, bank loan for the shortfall, repaid with
vacuum-insulation and leak-testing interest over a period — exactly the
equipment, printing or laser-marking machine, route Ratna took
packing tables, a delivery vehicle — plus
working capital for steel, wages and unsold
stock

Entrepreneurship The decision to make the bottle at all, the Mine. I identify the problem — cheap
design and price, the risk, and the daily plastic bottles that leak and are thrown
decisions on the business away — and combine the other three
factors to solve it

Technology Deep-drawing and vacuum insulation for a Buy the machines; learn the processes
double-walled bottle; laser marking; a UPI- from suppliers and from online courses
based payment system; a website

If one factor is missing. The chapter’s rule is that when factors are missing or misused,
production can become inefficient or can be halted. Which of the two happens depends on
which factor goes.

Page 45 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

MISSING FACTOR WHAT HAPPENS INEFFICIENT OR
HALTED?

No steel supply There is nothing to press. Machines and workers sit idle Halted
(land) while wages and interest keep running

No skilled welder Bottles leak at the seam and are rejected; either output falls Inefficient, then halted if it
(labour) or scrap rises persists

No capital (loan The presses cannot be bought at all, or stock cannot be paid Halted
refused) for; the business may never start

No electricity or Presses and washing stop; a generator raises cost sharply Halted, or costly
water

No entrepreneur Everything is present and nothing is decided — no design Never begins
chosen, no order placed, no price set

The lesson to draw: production is not the sum of the four factors but their product
— if any one of them is zero, the answer is zero, however large the others are. That
is why the chapter compares them to puzzle pieces, and why a business plan must
arrange all four before it starts, not one at a time.

Q9 Interview an entrepreneur or founder of business to understand their motivation
to start a business and the opportunities and challenges they saw. You can work in
pairs to create a questionnaire to collect the information and share what you have
learned in a report.

Method. Work in pairs — one asks, the other writes, so the conversation does not stop. Choose
someone reachable: a shopkeeper, a tailor, a food-stall owner, a small workshop owner, a tuition-
centre founder. Ask permission first, take about twenty minutes, and read your notes back at
the end so nothing is misquoted.
A questionnaire that follows the chapter. Keep the questions open, and group them by factor
so that your report almost writes itself:

1. What did you do before this, and what made you start on your own?
2. What problem did you see that nobody was solving well?
3. How did you choose this location, and do you own or rent it? (land)
4. How many people work with you? Where did they learn the work? Do you train them? (labour
and human capital)
5. What equipment did you have to buy first, and what did it cost roughly? (capital)

Page 46 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

6. Where did the money come from — savings, family, a bank loan? Was the loan hard to get?
(capital)
7. What was the hardest year, and what nearly stopped you?
8. Has any new technology changed how you work — UPI, a delivery app, a new machine?
9. What do you do differently from your competitors?
10. What one government rule, if it were simpler, would help you most?
11. What would you tell a student who wants to start something?

Report structure — one page is enough: Who we interviewed and what the business is · Motivation
· The four factors, one short paragraph each · Opportunities they saw · Challenges they faced · What
we learned. Add one photograph or sketch and one number.

Sample notes: “We interviewed Mrs Sunita Devi, who runs a pickle-making unit with
four women from her self-help group. Motivation: she was already making pickles
for relatives and realised she could sell them; she also wanted work that let her stay
near home. Land: two rooms of her own house, plus mangoes and chillies bought
from farmers in the next village. Labour: four women, all trained by her; she says
the hardest thing to teach is judging when the oil is hot enough. Capital: ₹40,000 to
start — steel vats, jars, a sealing machine — half from savings and half from her self-
help group. Opportunity: the highway dhabas nearby wanted a steady local
supplier. Challenges: keeping quality the same in every batch, and the FSSAI licence
paperwork, which took four months. What we learned: she said the business only
became stable when she stopped competing on price and started printing the date
on every jar — quality, not cheapness, was what the dhabas were buying.”

What to look for when you compare notes in class: almost every entrepreneur
you interview will name money and skilled workers as the two biggest constraints —
which is the chapter’s claim about capital and human capital, arrived at by your own
class rather than read out of a book.

Page 47 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Q10 Think like an economist. Let’s explore what happens when things change. If you
were Ratna, what would you do in the following situations? Discuss with your
classmates. I. Suppose the rent for your space suddenly doubles. Will you raise the
price of the food served to cover the costs? Will you look for a cheaper location?
How does this affect your business? II. Imagine one of your helpers quits suddenly.
Can the remaining workers manage the same amount of work? Will you need to
offer a higher salary to attract a new worker? III. You receive a small loan to invest
in better technology for your restaurant. Will this increase the production or
improve quality? Will it help you reach more customers? IV. Suppose another
restaurant opens in the neighbourhood. How will you attract and keep your
customers? Will you improve your service, reduce prices, or offer something new?
V. What government laws or rules should be amended to improve the ease of doing
business?

Take each situation as a change in one factor of production, and ask what it does to cost,
to output and to customers. That is what thinking like an economist means here.
I. The rent doubles — a sharp rise in the cost of land.

Suppose rent was ₹20,000 a month and doubles to ₹40,000.

Extra cost = ₹20,000 a month

If Pause Point serves about 40 meals a day → 40 × 30 = 1,200 meals a month

Extra cost per meal = 20,000 ÷ 1,200 ≈ ₹17

Raise prices? Only partly, and carefully. ₹17 on a ₹150 thali is about an 11 per cent rise.
Highway travellers can drive on to the next place, so if too many do, the extra rupees per
plate are lost several times over in lost plates.
Move somewhere cheaper? Rent is cheaper away from the highway — but the highway is
the business. The customers come because of the location, so a cheaper site could easily
cost more in lost sales than it saves in rent. Land is also immobile: her regular travellers
cannot be carried to the new place.
What I would actually do: negotiate a longer lease at a fixed rent, absorb part of the rise by
cutting waste and buying vegetables directly, raise prices modestly on the items customers
are least sensitive about, and try to sell more plates from the same rent — because rent is a
fixed cost, so every extra customer lowers the rent carried by each plate.
Effect on the business: profit falls immediately; if she cannot raise sales or prices enough,
she must cut costs elsewhere, and in the worst case the business becomes unviable at that
location.

II. A helper quits — a sudden shortage of labour.

Page 48 of 53

as e
Class 8 Social Science Chapter 7 Factors of Production
a g l AglaSem · NCERT Solutions

Can the rest manage? Ratna’s team is seven. Six can cover for a short while by working
co m
se
longer, but not indefinitely: service slows at the rush hour, mistakes and wastage rise, and
m.
o m g l a
.c no for a month.
tired staff fall ill — exactly the productivity argument of page 168 running backwards. So: yes

m a
se salary? Perhaps. If cooks are scarce locally, she will have to pay more to attract one
for a week,

l a
ag— that is what scarcity does to a price. But raising one person’s pay above the others’ creates
Higher

m
resentment, so it may be better to raise pay for the role and be open about it.

. co ag
m
Other options an economist would list: train an existing helper upward and hire a fresh

l a se
hand for the easier work (cheaper, and it builds human capital); hire part-time help only for
g for labour — a dishwasher or a dough-kneading
peak hours; or substitute a littleacapital
machine — which is the chapter’s point that technology can lower dependence on labour.

. c om
The lesson: a missing factor makes production inefficient before it halts it. Ratna should
keep one person cross-trained on every task so that no single resignationm
s e can stop the
kitchen.om
. c a gla
m
Aesmall loan for better technology — an addition to capital.
III. s
gl a
a Will it raise production or quality? Both, if it is spent on the right thing, because that is

m a s
agl
precisely what technology does — it enables enterprises to produce more goods with the

m.co
same or fewer inputs. A commercial gas range and a refrigerator would cut cooking time

l a se
and spoilage; a dough machine would free the cook for the tawa.
a g
Will it help her reach more customers? Yes, in two ways — she can serve more plates in
the same rush hour, and technology of a different sort (a UPI code, a listing on a delivery

com
.
app, a board with a phone number) brings customers who would otherwise have driven

e m
as
past.
m l
.co a g
The catch: the loan carries interest, payable every month whether or not the extra

a s em
customers arrive. So she should choose the equipment that pays for itself fastest, and work

a gl out the arithmetic before signing: if the loan costs ₹3,000 a month and the refrigerator saves
₹4,000 of spoiled food, it is worth it; if it saves ₹1,500, it is not.
se m
com g l a
IV. A competitor opens nearby.
m . a
ase
agl
Cutting prices is the weakest response. The new restaurant can cut too, and then both
earn less for the same work. Price wars are won by whoever has the deepest pockets, which
is rarely the small owner.

. c om
Compete on what she already has: five years of reputation for tasty, high-quality food.

m a s em clean — a decisive
Keep quality identical every single day, keep the place and the washroom

. o for highway travellers — and keep service fast, because
cfactor a gl a traveller’s real cost is time.
a s em Offer something new: a regional speciality the other place does not have, a fixed-price
agl traveller’s thali, packed food for the road, safe drinking water and phone charging, a shaded
c
m .
e
parking space.
m a s
. co agl
Keep the customers she has: remember regulars, take feedback, and give truck and bus

e m
as
drivers — who bring passengers — a reason to stop at hers.

a g l
The economist’s point: competition is not only a threat. It forces both restaurants to
improve, and the traveller gains. Ratna’s aim should be to be different, not merely cheaper.

co m
m .
m ase
.co


a g l Page 49 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

V. What rules should be amended to improve the ease of doing business. Frame this as what
a small owner like Ratna actually struggles with — this is a discussion question, so give reasons,
not slogans:

One single-window registration for a small enterprise — trade licence, food-safety licence,
shop-and-establishment registration and GST in one online application, with a fixed time
limit for a decision.
Simpler tax filing for small businesses — fewer returns a year, and forms a shopkeeper
can fill without hiring an accountant.
Faster, collateral-free small loans. The chapter shows personal savings running out and a
bank loan filling the gap; the easier that step, the more Ratnas there are.
Clear, published inspection rules — what will be checked, by whom and how often — so
that compliance is possible and honest owners are not at a disadvantage.
Timely payment of dues by large buyers to small suppliers, so a small unit’s working capital
is not locked up.

What ties all five situations together: each one changes the availability or the
price of a single factor, and in every case Ratna’s response is either to substitute (a
machine for a helper), to economise (less waste for higher rent), or to differentiate
(quality instead of a lower price). That set of three responses is the whole of small-
business economics, and it follows directly from the chapter’s claim that the factors
are combined in a proportion the producer can change.

Chapter at a glance
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 specialised skills, knowledge, abilities and
expertise required to perform that labour — it is the quality and efficiency of the labour,
not just the effort. Its facilitators are education and training, healthcare, and social and
cultural influences such as Japan’s kaizen (continuous improvement, applied since the mid-
1940s) and the German work ethic.

Page 50 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

India’s human capital is young but unevenly built. World Bank estimates for 2023 put
the adult literacy rate at 85 per cent for males and 70 per cent for females. The
Economic Survey of India 2024 says 65 per cent of Indians are below 35 — a possible
demographic dividend, but only if that population gets quality education, health, training
and skilling.
India has a long skill heritage. Work was an offering, done with devotion; tools were
worshipped, a tradition surviving as Viśhwakarmā pūjā or Āyudha pūjā; products blended
kalā (art) and vidyā (knowledge); the śhilpa śhāstras laid down exact postures, colours,
measurements and proportions. Indians stitched ships with cords instead of nails for over
2000 years — a technique that declined severely after the Europeans reached the Indian
Ocean in the 16th century.
Capital is money plus human-made resources — machinery, tools, vehicles, vending
carts, computers, shops, factories. Businesses raise it first from personal savings, family
and friends, then from bank loans (repaid with interest), and large companies from the
public through the stock market, sharing profits as a dividend.
The entrepreneur is the one who puts the rest together. Fig. 7.16 lists five tasks:
identifies a problem and is resolute to solve it innovatively, takes risks by investing money
and time, combines the various factors of production, makes the key decisions, and
contributes to the welfare of society. J.R.D. Tata (born 1904) is the chapter’s example — Tata
Airlines in 1932, later Air India; Bharat Ratna in 1992.
The mix of factors depends on the product. Agriculture, construction and handicrafts are
labour-intensive; semiconductor chips and satellites are capital-intensive. The factors
complement each other — if one is missing or misused, production becomes inefficient or
halts, as supply-chain disruption did during the COVID-19 pandemic.
Production carries responsibilities. Leather-factory waste in Tamil Nadu can pollute rivers
and soil; lead and mercury from un-recycled smartphones can leak into ground and water.
Towards workers, businesses owe fair compensation and safe conditions, skill development
and training, and workplace rights. India was the first nation in the world to bring a CSR
law, in 2014, requiring companies to spend 2 per cent of their average profits of the last
three years on CSR activities.

Page 51 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

Quick revision

TERM WHAT IT MEANS WHERE IT WHAT THE BOOK SAYS ABOUT
APPEARS IN IT
THE CHAPTER

Factors of The resources or inputs used in Introduction, Classified into four types — land,
production producing goods and services page 164 labour, capital and
entrepreneurship

Business or A firm, a shop, a factory, etc., Margin note, Enterprises combine various inputs
Enterprise which produces or sells goods or page 164 to create goods and services, and
provides a service so create chances for people to
take part in economic activities

Land Not only geographical land but ‘Land (natural Businesses either purchase the
natural resources — soil, forests, resources)’, page land or pay rent to use it for a
water, air, sunlight, minerals, oil, 166 period of time
natural gas

Labour The physical and mental effort ‘Labour (human Carpenters, farmers, construction
used in production resources)’, workers, teachers and doctors use
pages 166–167 varying levels of physical strength,
knowledge and skill

Skill The ability to do an activity or Margin note, A police officer, a scientist, a chef —
job well with practice and page 166 all require a special set of
training knowledge and skills

Human capital The specialised skills, ‘People as a Not just the basic efforts of labour
knowledge, abilities and resource’, page but also the quality and efficiency
expertise required to perform 167 of that labour
labour

Training The process of learning the Margin note, For a civil engineer: observing
required skills to do a particular page 168 construction sites, testing
job or activity materials, understanding safety
procedures, hands-on application

Kaizen A Japanese concept meaning ‘Social and Applied in Japan since the mid-
‘continuous improvement’ cultural 1940s; it helped Japan achieve
influences’, page higher standards of living
169

Page 52 of 53

Class 8 Social Science Chapter 7 Factors of Production AglaSem · NCERT Solutions

TERM WHAT IT MEANS WHERE IT WHAT THE BOOK SAYS ABOUT
APPEARS IN IT
THE CHAPTER

Adult literacy Percentage of people aged 15 and Margin note, India, 2023 (World Bank): 85 per
rate above who can read and write page 169 cent for males, 70 per cent for
with understanding a short, females
simple statement about their
everyday life

Demographic The benefit a country gets when Page 170 Economic Survey of India 2024: 65
dividend it has a large number of young per cent of Indians are below 35
and working people years

Śhilpa śhāstras Ancient texts with detailed ‘India’s ancient Texts on sculpture prescribe exact
design guidelines on sculptures, skill heritage’, postures, colours, measurements
paintings, buildings, wooden page 171 and proportions
items and jewellery

Capital In economics, any asset, whether ‘Capital’, pages Money plus human-made
physical or financial, used to 172–173 resources — machinery, tools,
produce goods and services vehicles, vending carts, computers,
shops, factories, office buildings

Interest The amount of money paid by Margin note, Ratna repaid interest along with a
the borrower of a loan to the page 173 part of her loan amount over a
lender for using their money for a period of time
specific time

Dividend An amount of money paid Margin note, Large companies raise money from
regularly by a company to its page 173 the public through the stock
shareholders out of its profits market by offering a share of the
profits

Startup An entrepreneurial venture with Margin note, An entrepreneur works hard to
limited resources that aims at page 174 make their startup idea successful
rapid growth and expansion
while leveraging technology

Supply chain A network of individuals, ‘How are the Disruption in it halts production, as
organisations, resources, Factors during the COVID-19 pandemic
activities and technology Connected?’,
involved in the production and page 178
sale of goods

Corporate Social Businesses addressing social and Page 181 India was the first nation in the
Responsibility environmental concerns in their world to bring a CSR law, in 2014 —
operations, to benefit society and 2 per cent of the average profits of
biodiversity the last three years

Page 53 of 53