1.3 Factors of production Flashcards
What are the 4 factors of production?
- Land
- Labour
- Capital
- Enterprise
What is the definition of land?
Reference to the natural
resources provided by
nature
What is the reward for land?
The payment given to
the owners of land is
rent
What are some examples of land?
- Agriculture (farming)
- Fishing
- Forestry
- Mining for oil, gas,
metals and other
minerals
What is the definition of labour?
The physical and mental
efforts of people needed
to make products and
provide services (human
resources).
What is the reward for labour?
The payment to labour is
wages.
What is the definition of capital?
The finance, machinery
and equipment needed
to make products and
provide services.
What is the reward of capital?
The payment for capital
is interest.
What is the definition of enterprise?
The skill and risk-taking ability of the
person who brings the other
resources or factors of production
together to produce a good or a
service.
What is the reward for enterprise?
The payment for enterprise is profit.
What is specialisation?
The focus of workers on specific tasks to increase efficiency
What is division of labour?
Refers to the process of breaking down tasks into smaller, more specialised tasks
What is physical capital?
Includes tangible assets such as machinery and buildings
What is human capital?
Refers to the skills and knowledge of workers
What are the two main types of capital in factors of production?
Human and Physical
