1.1 Main economic groups and factors of production Flashcards
• explain the role of the main economic groups: consumers, producers and the government, including their interdependence • explain the factors of production: land, labour, capital and enterprise, including how they might be combined
What are the three main economic groups?
Consumers, producers and the government.
What is the role of the consumer?
A person or organisation that directly uses a good or service.
What is the role of the producer?
A person, company or country that makes, grows or supplies goods and/or services.
What is the role of the government?
A political authority that decides how a country is run and manages its operations.
What is a ‘good’?
A tangible product, i.e. a product that can be seen or touched.
What is a ‘service’?
A intangible product, i.e. a product that cannot be seen or touched.
What is ‘interdependence’?
When each economic group responds to the action of the others.
What does the term ‘factors of production’ mean and the names of all 4 of them?
The resources in an economy that can be used to make goods and services, e.g. land, labour, capital and enterprise.
What does the term ‘land’ mean and examples?
The factor of production concerned with the natural resources of an economy, e.g. farmland and mineral deposits
What does the term ‘labour’ mean?
The factor or production that is concerned with the workforce of an economy in terms of both the physical and mental effort involved in production.
What does the term ‘capital’ mean and examples?
The factor of production that relates to the human-made aids to production, e.g. machinery, tools & factory buildings
What does the term ‘infrastructure’ mean and examples?
Capital that is human-made and used to support and enable the production process, e.g. broadband, roads and the electricity network system
What does the term ‘enterprise’ mean and examples?
The factor of production that takes a risk in organising the other three factors of production. The individual who takes this risk is known as an entrepreneur, e.g. Bill Gates & Deborah Meaden
How might the factors of production be combined?
An entrepreneur (enterprise) bears the risk and takes forward a business idea. They decide on the quantities of the different factors of production (land, labour & capital) to combine and organises them during production, and therefore, goods and services are produced.
