1.2 The Factors of Production Flashcards
What are the factors of production?
Land, Labour, Capital & Enterprise
What is land?
Non man-made, natural resources
What is labour?
The human effort put into the production process
What is capital?
Man-made resources used in the production process
What is enterprise?
The risk taking ability and combination of all factors of production
What is the reward for land?
Rent
What is the reward for labour?
Wages
What is the reward for capital?
Interest
What is the reward for enterprise?
Profit
Define mobility of the factors of production
How easily firms can switch between factors of production during the production process
What are two factors that cause labour to be less mobile?
- Geographical Immobility
- Occupational Immobility
Define Geographical Immobility
When workers find it difficult to move from one area to another due to lack of information or not being able to afford accommodation
Define Occupational Immobility
When workers find it hard to change occupations after losing a job due to lack of skills for another job - usually in structural unemployment
What are two influences on quality of the factors of production?
- Change in education/skills
- Technological Advancements
What are two influences on quantity of the factors of production?
- Competition Policy
- Changes in govt. regulation
