1.1.3 Factors of production Flashcards

1
Q

What are factors of production?

A

The inputs needed for creating a good or service.

(Land, Labour, Capital and Enterprise)

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2
Q

What are the four factors of production?

A
  • Land
  • Labour
  • Capital
  • Enterprise
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3
Q

[Factor of production]

Land

(What is it? | What is the factor payment?)

A

Land is all the natural resources available to us for production.

  • Nearly all of the things that fall under the category of “land” are scares – there aren’t enough natural resources to satisfy the demands for everyone.

Factor payment: Rent

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4
Q

[Factor of production]

Labour

A

Labour is the human input into the production process.

  • The population who are available to do work are called the labour force.

Factor payment: Wages

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5
Q

[Factor of production]

Capital

A

Capital is the equipment, factors and schools that help to produce goods or services.
It is different from land because capital has to be made first.

  • Much of an economy’s capital is paid for by the government – e.g. a country’s road network is a form of capital.

Factor payment: Interest

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6
Q

[Factor of production]

Enterprise

A

Enterprise refers to the people (entrepreneurs) who take risks and create things from the other three factors of production.

  • They set up and run businesses using any of the factors of production available to them. If the business fails, they can lose a lot of money. But if the business succeeds, the reward for their risk-taking is profit.

Factor payment: Profit

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7
Q

What is geographical mobility?

A

How easy production can move from one area to another.

E.g. How easy is it for someone living in Nottingham to work for a firm in Cardiff?

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8
Q

What is occupational mobility?

A

How well production can move from one job to another.

E.g. How well a machine can move from making shoelaces to making flapjacks?

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9
Q

Product vs Production vs Productivity

A

Product = What is made (output).
Production = Turning inputs into outputs.
Productivity = Output per unit of input. - This can apply to machinery or labour.

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