Chapter 2 - The Factors of Production

Question 1

Define geographical mobility.

Answer 1

Geographical mobility refers to the extent which labour is willing and able to move to different locations for employment purposes.

Question 2

Define occupational mobility.

Answer 2

Occupational mobility refers to the extent to which labour is able to move between jobs. retraining and upskilling help workers to improve occupational mobility.

Question 4

Define factors of production.

Answer 4

the factors of production refer to the resources required to produce a good or service, namely land, labour, capital, and enterprise.

Question 5

Define land.

Answer 5

The natural resources required in the production process.

Question 6

Define labour.

Answer 6

The human resources required in the production process.

Question 7

Define capital.

Answer 7

The manufactured resources required in the production process.

Question 8

Define enterprise.

Answer 8

The skills of a business person requires to combine and manage the other three factor of production.

Question 9

What is the reward for land?

Answer 9

Rent. Rental income comes from the ownership of property, such as physical and related assets, and is payed by tenants of the land resources.

Question 10

What is the reward for labour?

Answer 10

Wages and Salaries. Wages are paid to workers on an hourly basis, such as those who earn a national minimum wage. Salaried staff are paid a fixed amount per month.

Question 11

What is the reward for capital?

Answer 11

Interest. If the interest rate is high, it becomes less worthwhile for businesses and households to borrow money for production purposes because the cost of borrowing is high, and vice versa.

Question 12

What is the reward for enterprise?

Answer 12

Profit. Profit is what remains after all business costs are paid, including payment to the other factors of production.

Question 13

What are the four rewards for the factors of production collectively known as?

Answer 13

Income

Question 14

How can some people not be geographically mobile?

Answer 14

Family ties and related commitments.
Costs of living

Question 15

What are some of the causes of changes in the quantity and quality of factors of production?

Answer 15

• Changes in the cost of production
• Government policies can affect the cost of production, such as through the use of taxes and subsidies.
• New technologies allow firms to produce more output.
• Improvements in education and healthcare will improve the quality of labour as workers become more valuable to firms.
• Unfavourable weather conditions will reduce the supply of agricultural products.