Class 8 Social Science Exploring Society Chapter 7 Solutions (NCERT 2026–27) – Factors of Production
These Class 8 Social Science Exploring Society Chapter 7 solutions cover Factors of Production from Exploring Society: India and Beyond (Part I), the new NCF-2023 textbook for the 2026–27 session. The chapter belongs to the theme Economic Life Around Us and explains how every product we use is made by combining four key inputs — land, labour, capital and entrepreneurship — supported by technology. Below you get step-by-step answers to all Questions and activities, clear notes on key terms, extra practice, MCQs, Assertion–Reason and FAQs.
Class: 8Subject: Social ScienceBook: Exploring Society: India and BeyondChapter: 7Theme: Economic Life Around UsSession: 2026–27
Class 8 Social Science Exploring Society Chapter 7 – Overview
Chapter 7, Factors of Production, introduces the basic idea of how goods and services are produced. Using the relatable example of Ratna, who runs a small highway restaurant called Pause Point, it shows that every business combines inputs to create output. Economists group these inputs into four factors of production — land (natural resources), labour (human effort), capital (money and human-made assets) and entrepreneurship (the risk-taking organiser) — with technology acting as a powerful enabler. The chapter also explores human capital and its facilitators (education, healthcare, social and cultural influences), India’s rich skill heritage such as stitched shipbuilding, how the factors are interconnected through supply chains, and the responsibilities producers have towards natural resources and workers, including Corporate Social Responsibility (CSR).
Key Concepts & Terms
Factors of production: the resources or inputs used to produce goods and services. They are classified into four types — land, labour, capital and entrepreneurship.
Land (natural resources): not just geographical land but all natural gifts — soil, forests, water, air, sunlight, minerals, oil and natural gas. Businesses buy land or pay rent to use it.
Labour (human resources): the physical and mental effort used in production. Carpenters, farmers, teachers and doctors all contribute labour at different levels of strength, knowledge and skill.
Capital: money plus human-made assets — machinery, tools, equipment, vehicles, computers, shops and factories — used to produce goods and services.
Entrepreneurship: starting one’s own business or creating something new to solve a problem. An entrepreneur identifies a problem, takes risks, combines the other factors and makes key decisions.
Technology: the application of scientific knowledge. It is a facilitator that lets businesses produce more goods with the same or fewer inputs (for example UPI payments, GPS, drones).
Human capital: the specialised skills, knowledge, abilities and expertise people use to perform labour — the quality and efficiency of labour, not just the basic effort.
Facilitators of human capital: education and training, healthcare, and social and cultural influences (such as the Japanese idea of kaizen and the German work ethic).
Other key terms:Interest (money a borrower pays a lender for using their money), Dividend (a share of profits a company pays its shareholders), Stock market (where shares are bought and sold), Startup (a venture aiming at rapid growth using technology), Demographic dividend (the benefit of having many young working people), Supply chain (the network involved in producing and selling goods), and CSR (Corporate Social Responsibility).
“Questions and activities” — Full Solutions
All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Questions and activities section. Answers are original, written in exam-ready style.
1. 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?
ANSWERThe four factors of production differ in their nature and the role they play:Land refers to natural resources that nature provides — soil, water, minerals, forests — which businesses cannot create themselves.Labour is the physical and mental human effort applied in production, supplied by workers.Capital is human-made — money plus assets like machinery, tools and buildings used to produce goods.Entrepreneurship is the special ability to take risks, combine the other three factors and make decisions to run a business.Difficulties in classifying: an item can seem to fit more than one category. For example, a delivery vehicle is capital, but the fuel it runs on comes from natural resources (land); a skilled chef supplies labour, but the years of training that make him valuable are part of human capital. Items like a vegetable cart or a weighing scale are clearly capital, yet the fresh produce sold is partly land-based. Deciding whether something is “land” or “capital”, or labour versus human capital, was the main difficulty.
2. How does human capital differ from physical capital?
ANSWERPhysical capital consists of human-made, tangible assets — machinery, tools, equipment, vehicles, computers, factories and buildings — that a business owns and uses to produce goods. It can be seen, bought, sold and wears out over time.Human capital is intangible. It is the knowledge, skills, experience, abilities and expertise of people that make their labour more productive. It is built through education, training and good health, and it stays with the person.In short, physical capital is the “tools” of production, while human capital is the “skill and know-how” that decides how well those tools are used.
3. How do you think technology is changing how people develop their skills and knowledge?
ANSWERTechnology has removed many of the old barriers to learning. Online platforms such as the Government’s SWAYAM offer free MOOC courses in subjects like robotics, aquaculture and textile printing, which learners can study at their own pace from anywhere.Portals like the National Career Service connect people to job opportunities across sectors, from plumbing to accounting. This means a student in a small town can now gain world-class knowledge and skills without travelling to a big city.Thus technology has eliminated geographical barriers, made learning flexible and affordable, and allowed people to keep upgrading their skills throughout their working lives. (Your own examples are accepted.)
4. 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?
ANSWERThis is a personal-opinion question, so any genuine, well-reasoned answer is correct. A model answer: “If I could learn one skill today, I would choose effective public speaking and communication. Being able to express my ideas clearly and confidently would help me in classroom presentations, group projects and, later, in any career I choose. Good communication also helps build relationships and solve misunderstandings, so it is a skill that adds value in almost every part of life.”Other strong choices could be coding, cooking, a sport, or a regional craft — explain what the skill is, why it interests you, and how you would benefit from it. (Your own choice is accepted.)
5. Do you think entrepreneurship is the ‘driving force’ of production? Why or why not?
ANSWERYes, entrepreneurship can rightly be called the driving force of production. While land, labour and capital are essential inputs, they remain idle and unproductive on their own — someone must bring them together.The entrepreneur identifies a problem or opportunity, takes the risk of investing money and time, gathers the other factors of production, makes key decisions and works hard to turn an idea into goods and services. In doing so, an entrepreneur also creates jobs, supports livelihoods and contributes innovations that benefit society.Because the entrepreneur sets the whole process in motion and keeps it organised, entrepreneurship acts as the spark that activates the other factors. (A reasoned answer either way is accepted, but the textbook stresses the organising role of the entrepreneur.)
6. Can technology replace other factors like labour? Is this good or bad? Support your answer with the help of an example.
ANSWERTechnology can reduce the dependence on some factors, but it does not fully replace them. For example, increased use of machines in agriculture lowers the need for manual labour, and robots can assist in surgery or in factory assembly lines.Good side: technology raises productivity, improves quality, reduces hard or dangerous work, and can revive crafts — for instance, 3-D printing can produce handloom-style products at large scale. It frees people for more skilled tasks.Concerning side: if machines replace workers too quickly, some people may lose jobs and need retraining for new roles. Also, human effort is still needed at every stage to design, supervise and improve the technology itself.So technology is best seen as a partner that complements labour rather than a complete substitute; whether the effect is good or bad depends on how fairly the change is managed. (Your own example is accepted.)
7. How do education and skill training affect human capital? Can they substitute for each other, or do they complement each other?
ANSWEREducation builds the foundation of knowledge — from basic literacy to expertise in a field — and helps a person understand principles and solve real-world problems. For example, a civil engineering student learns the principles of design and materials.Skill training turns that knowledge into practical ability through hands-on practice — observing construction sites, testing materials and learning safety procedures.Both raise the quality and efficiency of labour, so they strengthen human capital. They complement each other rather than substitute: education without training stays theoretical, while training without education may lack deeper understanding. Together they prepare individuals to excel in their careers.
8. Imagine you want to start a business that produces steel water bottles. What kind of inputs are needed? How would you obtain them? Suppose one of the factors is missing; what happens to your business operations?
ANSWERInputs (factors of production) needed:Land/natural resources: a plot for the factory and raw material such as steel and water — obtained by buying or leasing land and purchasing steel from suppliers.Labour: skilled and unskilled workers to operate machines, finish and pack the bottles — hired from the local workforce.Capital: money, machinery for cutting and shaping steel, moulds and tools — arranged through personal savings, support from family, or a bank loan (on which interest is paid).Entrepreneurship: myself as the organiser, taking risks and combining the above; plus technology for efficient, good-quality production.If one factor is missing: production becomes inefficient or stops altogether. For example, without enough capital I cannot buy machines; without skilled labour the machines cannot run; without raw steel (land) there is nothing to make bottles from; and without entrepreneurship no one organises the work. The factors are interconnected and complement each other, so a missing factor halts operations.
9. Interview an entrepreneur or founder 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.
ANSWERThis is an activity. Work in pairs and prepare a short questionnaire. Useful questions include: What motivated you to start your business? What problem were you trying to solve? How did you arrange the money (capital)? Where did you learn the necessary skills? What were the biggest challenges in the early days, and how did you overcome them? How many people do you employ now?After the interview, write a report covering the entrepreneur’s motivation, the opportunity they spotted, the factors of production they had to gather, and the challenges they faced. Share your findings in class. (Answers will vary with the person interviewed.)
10. 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?
ANSWERA sudden doubling of rent sharply increases costs. I could raise food prices a little to cover the extra cost, but if I raise them too much, customers may go elsewhere. A cheaper location might save rent but could mean fewer highway travellers and loss of regular customers. The best approach is to weigh both options: perhaps negotiate the rent, cut other costs, and raise prices only modestly. Overall, higher rent reduces profit unless costs are controlled or sales increase.
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?
ANSWERLosing a worker reduces my labour, so the remaining staff may struggle to handle the same workload, leading to slower service or tired workers. In the short term I might share the tasks among the team, but soon I would need to hire a replacement. To attract a good new worker quickly I may have to offer a competitive or slightly higher salary, plus good working conditions, which raises my labour cost.
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?
ANSWERInvesting the loan in better technology — for example a faster kitchen appliance or an online ordering and digital-payment (UPI) system — can increase how many meals I prepare and improve their consistency and quality. Online ordering and delivery apps can help me reach more customers beyond the highway. I must, however, make sure the extra income covers the loan and its interest.
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?
ANSWERNew competition means I must give customers a reason to keep choosing me. I would focus on what made Pause Point popular — tasty, high-quality food and good service. I could improve the menu by adding new or local dishes, keep the place clean and welcoming, offer fair prices or small loyalty discounts, and ensure quick, friendly service. Competing on quality and customer experience is usually wiser than only cutting prices, which can hurt profit.
V. What government laws or rules should be changed to improve the ease of doing business?
ANSWERTo make running a business easier, the government could simplify the process of getting licences and registrations, reduce the paperwork and number of approvals, make taxes simpler and clearer, and provide easier access to affordable loans for small businesses. Faster, online single-window clearances and fair, transparent rules would encourage more people to start and grow businesses. (Reasoned suggestions are accepted.)
Extra Practice Questions
Short Answer Type Questions
Q1. What are factors of production? Name the four types.
ANSWERFactors of production are the resources or inputs used to produce goods and services. The four types are land (natural resources), labour (human effort), capital (money and human-made assets) and entrepreneurship (the risk-taking organiser).
Q2. What is meant by ‘land’ in economics?
ANSWERIn economics, ‘land’ means not only geographical land but all natural resources such as soil, forests, water, air, sunlight, minerals, oil and natural gas. Businesses buy land or pay rent to use it.
Q3. Who is an entrepreneur?
ANSWERAn entrepreneur is a person who comes up with an idea, identifies a problem, takes risks by investing money and time, gathers the other factors of production, makes key business decisions and works hard to make their venture successful.
Q4. What is a demographic dividend?
ANSWERA demographic dividend is the benefit a country gets when it has a large number of young, working people. When more people work and earn and fewer depend on them, the country can grow businesses and improve living standards.
Q5. What is Corporate Social Responsibility (CSR)?
ANSWERCSR is the practice by which businesses voluntarily address social and environmental concerns — reducing pollution, caring for local communities and treating employees and customers with respect. India was the first nation to make a CSR law (2014), requiring eligible companies to spend 2 per cent of their average profits of the last three years on CSR activities.
Long Answer Type Questions
Q1. Explain the facilitators of human capital with examples.
ANSWERHuman capital — the skills, knowledge and abilities of people — is built up by several facilitators. Education and training are the most important: education gives knowledge from basic literacy to specialised expertise, while training turns it into practical skill, as when a civil engineering student learns design principles and then applies them at construction sites. Healthcare supports human capital because healthy children attend school regularly and learn better, and healthy workers can work creatively and miss fewer days. Social and cultural influences also matter: the Japanese idea of kaizen (continuous improvement) and the German work ethic of punctuality and attention to detail helped those countries raise living standards and become global leaders in technology and manufacturing. Together these facilitators make a workforce more productive.
Q2. How are the factors of production interconnected? What role does the supply chain play?
ANSWERLand, labour, capital, entrepreneurship and technology are combined to produce goods and services, and the proportion of each depends on the product — agriculture and handicrafts are labour-intensive, while semiconductor chips and satellites are capital-intensive. These factors complement each other, so if a factor is missing or misused, production can become inefficient or stop. New techniques can change the proportions used — machines reduce the labour needed in farming, and 3-D printing can revive textile crafts. Because inputs are available in different places, businesses gather them from varied locations through a supply chain — a network of people, organisations, resources, activities and technology involved in producing and selling goods. When this chain is disrupted, as during the COVID-19 pandemic, production can halt. Hence the factors are interconnected and depend on a well-functioning supply chain.
Q3. Describe India’s ancient skill heritage with an example.
ANSWERIndia has a rich legacy of skill-based knowledge and workmanship. For ancient Indians, work was a form of self-expression and a striving for perfection, done with devotion almost as an offering; even the tools used were worshipped, a tradition continued today as Vishwakarma puja or Ayudha puja. Creating products blended kala (art) and vidya (knowledge), passed down and built upon across generations. The shilpa shastras are ancient texts giving detailed design guidelines for sculptures, paintings, buildings, wooden items and jewellery, with exact specifications for postures, colours and proportions. A striking example is stitched shipbuilding: for over 2000 years Indians stitched wooden planks together with cords instead of nails, making flexible ships that crossed the Indian Ocean for trade and cultural exchange. This skill declined after Europeans arrived in the 16th century and now survives mainly in small fishing boats.
MCQs & Assertion–Reason
1. The resources or inputs used to produce goods and services are called:
(a) products (b) factors of production (c) services (d) profits
2. Which of the following is NOT one of the four factors of production?
(a) Land (b) Labour (c) Technology (d) Entrepreneurship
3. In economics, the word ‘land’ includes:
(a) only farmland (b) only buildings (c) all natural resources like water, minerals and forests (d) only city plots
4. Machinery, tools, vehicles and money used in a business are examples of:
(a) land (b) labour (c) capital (d) technology
5. Human capital mainly refers to:
(a) the number of workers (b) the skills, knowledge and expertise of people (c) factory machines (d) bank loans
6. The amount paid by a borrower to a lender for using their money is called:
(a) dividend (b) interest (c) profit (d) rent
7. The share of profits a company pays regularly to its shareholders is called:
(a) interest (b) rent (c) dividend (d) wage
8. A person who takes risks, combines factors of production and starts a new venture is a/an:
For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.
A-R 1. Assertion: The factors of production are interconnected.
Reason: If one factor is missing or misused, production can become inefficient or even halt.
A-R 2. Assertion: Human capital is the same as physical capital.
Reason: Human capital is the knowledge and skills of people, while physical capital is human-made assets like machinery.
A-R 3. Assertion: Technology can completely replace all other factors of production.
Reason: Human effort is still needed at every stage to design, supervise and improve products and processes.
A-R 4. Assertion: Good health is a facilitator of human capital.
Reason: Healthy children attend school regularly and healthy workers can do more in less time.
A-R 5. Assertion: Large companies can raise financial capital from the public through the stock market.
Reason: The stock market is a special market where shares of companies are bought and sold.
Answer key: 1-(A), 2-(D), 3-(D), 4-(A), 5-(A).
Exam Tips & Common Mistakes
How to score full marks in this chapter
Always name the four factors clearly — land, labour, capital, entrepreneurship — and remember technology is an enabler/facilitator, not a fifth factor. When asked to compare, use a two-sided structure (e.g. human capital = skills/knowledge of people; physical capital = human-made assets). Support opinion questions (Q4, Q5, Q10) with a clear reason and a real example. Use the textbook’s own examples — Ratna’s restaurant, stitched shipbuilding, SWAYAM, J.R.D. Tata, the 2014 CSR law — to show you have studied the chapter.
Common mistakes to avoid
Calling technology a “fifth factor of production” — it is a facilitator/enabler.
Confusing human capital (skills and knowledge) with labour (effort) or with physical capital (machines).
Mixing up interest (paid on a loan) with dividend (paid to shareholders).
Thinking “land” means only soil or plots — it covers all natural resources.
Leaving activity-based questions (Q9, Q10) blank — write your own reasoned response or report.
Forgetting to give an example when the question asks for one (Q6).
Frequently Asked Questions
What are the four factors of production in Class 8 Social Science Chapter 7?
The four factors of production are land (natural resources), labour (human effort), capital (money and human-made assets such as machinery and buildings) and entrepreneurship (the risk-taking organiser who combines the other factors). Technology acts as an enabler that helps produce more with the same or fewer inputs.
What is the difference between human capital and physical capital?
Physical capital is the tangible, human-made assets a business uses — machines, tools, vehicles and buildings. Human capital is the intangible knowledge, skills, experience and expertise of people that make their labour more productive, built through education, training and good health.
What is the exercise heading for Chapter 7 of Exploring Society?
The end-of-chapter exercise in Exploring Society: India and Beyond Chapter 7 is headed Questions and activities and contains 10 numbered questions, all answered step by step on this page.
