Besides labor, there are two other key factors of production for which firms need to employ at the optimal level. These inputs are land and capital.

For a farmer, land refers to the area used to grow crops. For a factory, it includes the physical space where the factory is built and operates. For a restaurant, land includes the space where the dining area, kitchen, and other facilities are located. Land is essential for production regardless of the type of business.

Producers want to determine the optimal amount of land needed for their operations. For example, farmers need to know how much land is required to grow crops. Land can be either rented or purchased. However, focusing on the rental price is helpful because it represents an ongoing expense for producers, much like how wages are a regular cost for labor. This recurring cost affects their production expenses and must be carefully considered in decision-making.

Capital is the other factor of production for which the optimal amount is to be determined. It comprises resources that facilitate the production of other goods and services. Examples of capital for a manufacturer could include factory and office buildings, machinery, robotics, and tools. For farmers, capital items encompass tractors used for tilling the soil, harvesters employed in collecting crops, and irrigation systems that manage water distribution. However, capital is not limited to physical objects; it also includes intangible objects like computer software, which businesses utilize to produce goods and services.