5c-factors of production Flashcards
Q: What are the factors of production?
A: The four factors of production are the resources used to produce goods and services. They include:
Land – Natural resources.
Labour – Human effort.
Capital – Machinery and tools.
Enterprise – Business leadership and risk-taking.
Q: Why are factors of production important?
A:
Essential for economic growth and development.
Allow businesses to produce goods/services efficiently.
Impact business costs and profitability.
Q: What is land as a factor of production?
A: Land refers to natural resources used in production, including:
Raw materials (e.g., oil, coal, wood).
Land area for factories, farming, and offices.
Q: How does land impact business costs?
A:
Availability and cost of land affect business location decisions.
Limited natural resources lead to higher production costs.
Sustainable use of land reduces environmental impact.
Q: What is labour as a factor of production?
A: Labour includes workers who provide skills and effort to produce goods and services.
Q: What factors affect labour productivity?
A:
Education and training – Skilled workers improve efficiency.
Wages and motivation – Higher pay attracts better workers.
Technology – Automation can replace labour or make it more productive.
What are the two types of labour?
A:
Skilled Labour – Highly trained workers (e.g., engineers, doctors).
Unskilled Labour – Workers requiring little training (e.g., factory workers).
Q: What is capital as a factor of production?
A: Capital refers to man-made resources used in production, such as:
Machinery and tools.
Buildings and vehicles.
Money invested in production.
Q: What is the difference between fixed and working capital?
A:
Fixed Capital: Long-term assets like machinery and buildings.
Working Capital: Short-term funds used for daily operations (e.g., stock, cash).
Q: How does capital improve efficiency?
A:
Investment in modern machinery increases productivity.
Reduces labour costs through automation.
Improves quality and consistency in production.
Q: What is enterprise as a factor of production?
A: Enterprise refers to entrepreneurs who take risks to combine land, labour, and capital to create businesses.
Q: What are the roles of an entrepreneur?
A:
Organising production – Combining resources efficiently.
Risk-taking – Investing money in uncertain markets.
Innovation – Developing new ideas and products.
Q: Why is entrepreneurship important?
A:
Drives economic growth and job creation.
Encourages competition and innovation.
Helps adapt to market changes.
examiners tips
Use real-world examples.
✅ Use real-world examples. For instance, discuss how Amazon uses capital in its warehouses.
examiners tips
Explain how factors of production interact.
✅ Explain how factors of production interact. Labour and capital often work together for efficiency.
examiners tips
Apply to different industries.
✅ Apply to different industries. Labour-intensive vs. capital-intensive industries require different resources.
examiners tips
Use economic impact analysis.
✅ Use economic impact analysis. Explain how shortages in one factor affect business costs and output.
examiners tips
Compare developed vs. developing economies.
✅ Compare developed vs. developing economies. Some countries have more access to capital, while others rely on labour.
