2. Factors of Production Flashcards
What is meant by the term “resources”?
The resources used to produce goods and services are classified into four categories known as the four factors of production.
State the four factors of production.
Land, Labour, Capital, Entrepreneurship (management)/
What does “Land” include?
All the resources provided by nature that are used to produce goods. It includes the soil on which agricultural products are grown, anything that is grown on the land and used in the production of other goods, and anything that is found under the land, including oil, minerals and elements. It therefore includes all natural resources.
What is another term for “Land”?
Natural Capital
What does “Labour” include?
All human resources used in producing goods and services. It is the physical and mental contribution of the existing workforce to production.
What is another term for “Labour”?
Human Capital
What does “Capital” include?
Anything that has been made by humans, and is used to produce a good or a service. Includes all the buildings, offices, factories, machines, tools, infrastructure and technologies, and buildings that are used to produce goods and services.
What is another term for “Capital”?
Physical Capital
What is meant by “Entrepreneurship”?
Management is the organising and risk-taking factor of production. Entrepreneurs organise the other factors of production - Land, Labour and Capital - to produce goods and services.
In what ways do Entrepreneurs organise the other factors of production?
They may use their personal money and the money of other investors to develop new ways of doing things and new products, buy the factors of production, produce the goods and services and, hopefully, make a profit.
Why is Entrepreneurship risky?
A profit is never guaranteed and money may be lost.
