1.5 Factors of production. Natural Resources, Labour, Capital,Entrepreneurship(PAGE 8-16) Flashcards
Describe and distinguish between the factors of production
Natural resources and Labour are sometimes called primary factors of production.
Capital and Entrepreneurship are sometimes called secondary factors of production.
Without these factors of production there can be no production of goods and services.
Example of production of a good:
Wood - Equipment - Human resources
Importance of factors of production in the market system.
Households derive an income from the ownership of the factors of production.
Describe and identify natural resources
a Natural resource is anything that people can use which comes from nature.
Cannot be increased at will.
Examples of natural resources:
- Air, Water and soil
- Biological resources (e.g. plants and animals)
- Raw materials (e.g. minerals)
- Space and Land
- Wind, Geothermal, Tidal and Solar energy
Classification of Natural Resources
Renewable Resources:
- Living, can renew themselves
- E.g. Threes(forest and woodlands), Crops, Livestock like fish, Water and soil(non-living)
Flow Renewable Resources:
- Do not need regeneration or re-growth
- E.g. Tides, Solar power and Wind
Non - Renewable Resources:
- Cannot be replaced once they are used up or harvested.
E.g. Fossil fuels, Coal and Petroleum
How can we increase the productivity of Natural resources
Natural resources can be made more productive with the aid of technology.
E.g. Fertilisers improved the quality of land.
Drilling technology has opened up oil
deposits in frozen areas.
What will happen if we overexploit natural resources?
Overexploitation can cause terrible environmental damage and long-term economic, environmental and human suffering.
Describe the income that is dirived from the ownership of natural resources
- Owners of natural resources earn an income in the form of rent from it.
- Payment made to the owners of natural resources for the use of the natural resources.
Factors of Prodution:
Describe what Labour is
Labour is the human effort that is put into the production of goods and services, and includes both physical and mental effort.
E.g Writing a book involves both physical effort, typing - and mental effort - using the brain for research and creativity.
Quantity of Labour
The quantity of labour refer to the size of a population. The number of people who are of a working age(15-64) and who are willing and able to work.
Quality of Labour
The quality of labour refers to the skill, knowledge, and health of workers.
The quality of labour is also often called human capital.
The higher the quality of human capital in a country, the higher the productivity of labour, and the more goods and services are produced to satisfy needs and wants.
Describe income that is derived from the ownership of labour
In return for providing firms with labour services, the owners of these labour services receives remuneration in the form of wages, salaries, royalities, commissions, management and consultancy fees, bonuses and fringe benefits
Describe income that is derived from the ownership of labour in a market system
The underlying forces that dermines the level of wages and the difference in wages are linked to the forces of demand and supply.
The demand for labour is based on the demand for goods and services that are to be produced with labour.
Remuneration of labour depends on two things:
The demand for the goods and services produced by labour.
How valuable the person is to the firm.
Capital:
Describe and identifiy capital
Capital comprises manugactured resources such as machines, tools and buildings which are used in production of other goods and services.
Capital goods are scarce, saving, which is abstaining from comsumption, is necessary pre-request for capital information and investment.
The more machines, factories and tools we have, the more goods and services can be produced.
The better the quality of these machines and so forth, the more productive we can be, and the more productive we are, the higher our economic growth will be.
Capital:
Describe the income that is derived from the ownership of capital
The reward for capital is the interest payment that the owner of capital receives for making his or her capital available for production.
This is expressed as an annual percentage of the amount loaned to purchase the capital goods and it’s called the interest rate.
Describe and identify entrepreneurship
Where will these jobs come from? (Create jobs)
The four factors of production, Labour, Capital, Natural resources and Entrepreneurship are key to the improvement and sustainability of any economy.
What is Entrepreneurship?
Entrepreneurship is the willingness to take risks and develop, organise and manage a business venture in a competitive global marketplace that is constantly evolving.
Entrepreneurs are pioneers, innovaters, leaders and inventors.
