Chapter 2: Factors of Production Flashcards
What are the four factors of production(will be written as FOP in the rest of the questions)?
Land, labour, capital, and enterprise
What are the FOP used to produced?
Goods and services
What is land?
They are gifts of nature available for productions
True or false?
Fish are counted as land
True, this is because land includes not only the land itself, but also what is beneath it, what occurs naturally on it, and what is found in them.
What is labour?
It is the human effort(both physical and mental effort) used in producing goods and services
What is capital?
They are the human-made goods used in production
What is the difference between consumer goods and capital goods?
Consumer goods are wanted for the satisfaction they provide to their owners while capital goods are not wanted for their own sake
What is enterprise?
It is the willingness and ability to bear uncertain risks and make decisions in a business.
What does it mean when something is occupationally mobile?
It means that it is capable of changing use
What does it mean when something is geographically mobile?
It means that is is capable of moving from one location to another.
State whether each factor is occupationally mobile
Land is occupationally mobile, labour varies, capital varies, enterprise is occupationally mobile
What is the most mobile factor?
Enterprise
What can cause geographical immobility for labour?
-Differences in the price and availability of housing
-Family ties
-Differences in educational systems
-Lack of information
-Restrictions on the movement of workers
(Exam tip: Never write your answers like this(in bullet points) unless asked to)
State whether each factor is geographically mobile
Land is geographically immobile, labour varies, capital varies, enterprise is geographically mobile
What is a renewable resource?
Resources that are replaced by nature
True or false?
Renewable resources are replaced by nature however, they can become non-renewable resources if they are over-exploited.
True
How can we increase the quality of land?
Using fertilisers, increasing the purity of rivers, stopping firms from polluting, and providing good drainage
What influences the quantity of labour?
1.Number of workers
2.Number of hours for which they work
What determines the quantity of labour?
-The size of the population
-The age structure of the population
-The retirement age
-The school leaving age
-Attitude to working women
What is the labour force?
They are people who are in work and the people seeking work actively
What influences the number of hours people work?
-Length of the average working day
-Whether they work full or part-time
-The duration of overtime
-Length of holidays
-Amount of time lost to sickness
What is productivity?
The output per factor of production in an hour
What is labour productivity?
The output per worker hour
What is an output?
The goods and services produced by the FOP
What can improve the quality of labour?
-Better education
-Better training
-Better healthcare
-More experience
What are investments?
Spendings on capital goods
What are gross investments?
Total spending on capital goods
What is depreciation?
The value of capital goods that have been worn out
How do you calculate net investment?
Gross investment - Depreciation
What can increase the quality of capital?
Advances in technology
What can increase the quantity of enterprise?
-Increase in the number of entrepreneurs
-Good education system
-Lower taxes on firms’ profits
-Reduction in government regulations
What can increase the quality of enterprise?
-Better education
-Better training
-Better healthcare
-More experience
Fill in the blank:
Payments are made to each FOP. Firms pay _____ to its workers(labour), entrepreneurs earn ______, land receives ____, and ________ is the payment for capital.
Wages, profit, rent, interest
